Help With FHA Approval for Condo Associations   3 comments

Late last year the Federal Department of Housing and Urban Development (“HUD”) passed new regulations regarding their requirements for approving condominiums for FHA loans. (see previous posts below.) In the past, the obligation for obtaining approval generally fell on a developer or lender’s shoulders, but the process was also a bit simpler (with the ability to get spot approvals instead of entire project approvals) and was longer-lasting. Now, because of the changes, many previously-approved condominiums need to obtain re-certifications and all condominiums will need to be re-certified at the end of a two-year period.

This matters to condominium associations as the owners of units in condominiums which do not have a current certification will likely find it more difficult to sell their units. FHA financing already accounts for a majority of the financing of sales in condominiums.

If the condominium is not approved for FHA loans, then, as you can imagine, it will likely adversely impact a unit owner’s ability to close on the sale of his or her unit. Some owners may say “my unit is valued way above the FHA maximums”, but the maximums apply to the amount of the loan and not the value of the unit. What this means is that units that may be priced above the FHA maximums may still have purchasers that are interested in, and otherwise qualify for, FHA loans. Those purchasers may be bringing other money to the closing table that allows them to have a lower loan amount.

As mentioned above, in the past lenders and developers often handled the application for approval for condominiums, going through the entire approval process, or the less burdensome “spot approval” process for the condominium. Due to the changes in the regulations, though, and the need to routinely get the condominium re-certified, the burden of getting approval and monitoring to assure that approval is maintained is not one that lenders will necessarily want to take on. This is particularly true of lenders that may only have one or two loans in a particular condominium. As you can imagine, once a developer initially gets a condominium approved and sells out its units, they no longer have an interest in maintaining that approval status.

We are assisting our clients with looking into whether it makes sense for them to have their condominum association apply for FHA approval. We also provide the legal document review necessary for the approval process. Contact Amy H. Bray at for further information.


3 responses to “Help With FHA Approval for Condo Associations

Subscribe to comments with RSS.

  1. great article.

    tobe rouge

  2. I am looking to refinance and need to help my condo board get us approved for FHA. I have no clue where to start and our crappy management property is of no help. Can you advise where I’d even start? I’m under the gun and need to do this quickly. I have looked all over and don’t even know where to start. I’m in Utah, is there a service you know of that helps with this process?


    • Obviously, I’m not in Utah and not being a Utah attorney/firm I’m pretty limited in the help I can give. You ought to consider contacting the local Community Associations Institute chapter for resources that can send you in the right direction. is the website for the national organization and you can find a contact there. There are some excellent community association attorneys in Utah too that can most likely help. There are also companies that are helping associations with getting FHA approvals, like FHApro.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: