FHA and USDA Loan Re-certification Process

Started by GwynethK • 16 replies • 2093 views

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GwynethK (North Carolina)
Posts: 8

Posted:

Good afternoon-

Does anyone know how lengthy a process it might be for an HOA to be re-certified for FHA and USDA loans? The previous management company dropped the ball on the paperwork for my community and let it expire without the Board's knowledge. I was hoping to find out whether it's anywhere between a few weeks to a few months.

Thank you!

TimB4 (Tennessee)
Posts: 21,046

Posted:

Gwyneth,

Here is a January 4, 2013 article on that topic.

To see if you are current or if the approval has expired see
https://entp.hud.gov/idapp/html/condlook.cfm

I was unable to locate the actual application. Having never done one, I can't say how long or how much of a pain it is.

Hope this helps,

Tim

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Loan programs are getting tougher out there. If your area/HOA does not qualify for FHA or federal backed loans it will not be the end of the world. It just means that potential buyers must find another loan package which may have a bit higher interest rate. The qualification process may also be tighter. Existing owners may find refinancing a little harder or a bit higher interest rate. This is the WORST case scenerio.

It has it's benefits to be qualified for these type of loans no doubt. The process takes as long as it takes from the effort put into it. It may be difficult and be aware of your rental percentage. That would be a major factor but not much you can do about limiting rentals.

I would educate people on the importance of this loan option to be available and hopefully others will help out to get it. Good luck!

Former HOA President

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Again misinformation... I am someone who actually was involved in signing the paperwork for FHA loans for my Association. This 15% collection rate is nothing. The real worry of that form is rental amounts, if the HOA is involved in a lawsuit, and what it's overall health is. Collections play a very small role if any. They do ask if the HOA does have any outstanding liens or foreclosure. Which ironically indicates to them the HOA is doing something to collect owed funds and comes out in the wash.

So from Richard's information I can only assume that he does not live in all of his HOA properties. Which means he is RENTING those properties out. That then is the REAL reason why HOA's suffer from loan issues as there is a RENTAL cap of like 30 to 40% must be owner occupied. HOA's can NOT have rental caps themselves except in California. (That just happened last year). The HOA does NOT own the actual properties and thus can't control renting. Only the mortgage company/bank can do that. Long story that's been covered multiple times on this site. Go read up on those.

So to recap. It is NOT the collection rate of your HOA but the high rental rate of your HOA that can effect your loan terms. There is a PUD form that is filled out that is just like your appraisal form you get for your home when you sell/refinance. It's just for the HOA instead. That is what most federally based loan programs like FHA, Freddie Mac, and Fannie Mae uses. That is the paperwork your HOA reports it's health to. Not to a collection agency.

Former HOA President

TimB4 (Tennessee)
Posts: 21,046

Posted:

Actually, the 15% has very little to do with the original posters question:

"Does anyone know how lengthy a process it might be for an HOA to be re-certified for FHA and USDA loans?"

Richard chose to take the issue into a different direction so he could take over yet another thread and SPAM the forum.

Melissa was correct that FHA certification isn't required. It does limit the loan possibilities and I do believe that it is in the best interest of the membership for a condominium complex that has been approved to maintain that certification as long as they can.

TimB4 (Tennessee)
Posts: 21,046

Posted:

GwynethK,

I did some more research and came up with the following:

The Condominium Project Approval and Processing Guide from HUD website

MORTGAGEE LETTER 2009-19 Condominium Approval Process Opens a MSWord document. Per that letter:
FHA will now allow lenders to determine project eligibility, review project documentation, and certify to compliance of Section 203(b) of the NHA and 24 CFR 203 of HUD’s regulations

I hope this provided more assistance than my last post.

Tim

TimB4 (Tennessee)
Posts: 21,046

Posted:

Quote:

Posted By RichardA14 on 04/15/2013 7:03 AM
Delinquent condo association fee payments. FHA refuses to approve a project where more than 15 percent of the units are 30 days or more behind on payments of condo fees to the association.

Actually, per Mortgagee Letter: 2012-18, that rate is no more than 15% of units that are 60 days or more delinquent.

TimB4 (Tennessee)
Posts: 21,046

Posted:

Shoot. Hate the lack of edit capability.

What should have been highlighted was the difference between the 30 days delinquent quoted by Richard and the 60 days delinquent identified in the Mortgagee letter.

TimB4 (Tennessee)
Posts: 21,046

Posted:

Quote:

Posted By RichardA14 on 04/15/2013 7:51 AM

TimB4, why didn't you make this post when MelissaP said, "This 15% collection rate is nothing." ?

That's because the figure of 15% wasn't in question.

You were the first to post that it was 15% of those 30 days or more behind. That figure was incorrect. Therefore, I simply corrected it and provided my source for the correction so others (if they so desired) could verify my statement.

Richard, Why is it you continue to deflect rather than to answer simple questions in the other thread?

In case you forgot what they are:

Quote:
Posted By TimB4 on 04/14/2013 12:53 AM

Richard, lets see if your actually willing to answer these questions (or if you will once again deflect):

1) How large should the debt become in order to justify the expense of obtaining a judgement lien (for the purpose of this discussion lets say a judgment lien will cost $2,000)?

2) Do you have specific proof that this is worthwhile for an Association? Please note, what I mean by that is are there HOAs that have gone through the trouble of obtaining judgement liens and then selling them not looking for info of selling judgements in general just those that were/are obtained by Associations.

3) How far do you believe should your Association allow a member to go in debt prior to recording a lien? (example 1 month, 1 year, etc.).

TimB4 (Tennessee)
Posts: 21,046

Posted:

BTW, that 60 days figure was also mentioned in the January 2013 article I provided a link to earlier in this thread.

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

Quote:

How far do you believe should your Association allow a member to go in debt prior to recording a lien? (example 1 month, 1 year, etc.).

Most homeowners don't have a clue to what their HOA does. They just pay their dues and ignore the HOA.

TimB4 (Tennessee)
Posts: 21,046

Posted:

Quote:

Posted By RichardA14 on 04/15/2013 9:07 AM
1) How large should the debt become in order to justify the expense of obtaining a judgement lien (for the purpose of this discussion lets say a judgment lien will cost $2,000)? Answer: The size of the debt does not matter. Each case as to be weighed individually.

For those who are interested, these questions were initially asked in this thread and the discussion is continuing in on this thread.

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