New FHA regulations make attaining condo loans harder if building not certified
Posted on Wednesday, February 8, 2012 at 9:08:17 AM
According to the Seattle Times, new Federal Housing Administration (FHA) regulations could make attaining FHA loans for condominiums harder for consumers. The regulations specify that condos must be certified by the buildings, instead of at a unit-by-unit basis like previous years. The change came about to decrease defaults by determining the financial viability of the entire complex before claiming it was FHA-approved.
Since October 1, 2011, approximately 38 percent of all condominium communities have gone through the certification process and been rejected by the FHA.
"There are new, more onerous guidelines to comply with, and there are definitely challenges," said Jason Will, national condominium sales manager for Wells Fargo Home Mortgage. "The smaller or self-managed homeowners association might not be aware of the guidelines changes until they have a buyer. You actually have a real transaction in jeopardy."
However, the low approval rating may be a positive point for consumers. Condo units approved by the FHA are better insured as a financial investment. Individuals searching for condo units should check the FHA certification status before considering buying in order to come to a more informed decision.