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Equal Treatment for Condo Financing, Posted by Ron

Comments
  1. Yes Ron. We need to remind Congress and the FHA that there is no “bad” inventory. In the past, not enough regulation within the banking industry was in place to be sure that the BUYERS were properly QUALIFIED and properly PREPARED for home ownership. Condos of all types are VERY important to the housing industry as entry level purchases and also for homeowners who are downsizing.
    Thanks!

  2. This is great – we have SO many condos in Florida that qualify for NO financing at all just sitting there!

  3. Amy Reed

    Thank you! It would be an awsome accomplishment to have them loosen guidelines. Buying and Selling Condos is almost null these days..Unless of course…you have cash! I’ll be looking forward to an update! Go Get ‘em…

  4. Get a Condominium approved for financing is hard.
    I am currently trying to get a condominium complex in the city of Richmond, VA approved for financing ,since there are no more spot approval financing, from FHA.

    The biggest obstacle so far, the lack of cooperation from the condominium association in providing the executed documents.
    The Condominium Owners association needs to understand that financing is crucial if they want to sell their units. The Condo Association does not understand the new requirements so they are fighting every document that the bank request and therefore have delayed the settlement of a condo unit by months.

  5. Donna Roberti

    Condos should have the same “privileges” as single-family homes as property/ title is transferred.. More and more young families are purchasing condos. In today’s economy, as there is the need for two working partners /parents, condos provide, the freedom from having to maintain property and the added luxury of the amenities enjoyed by the entire family. Also, there is the potential of communal support system e.g. babysitters, dog walkers, etc. Please continue your advocacy. Thank you.

  6. Ron:

    First, thank you for your representation of the condominium market.

    I specialize in waterfront condomniums. Many of these are used as second homes,
    or rented. Here, on Florida’s West Coast, we have had very few foreclosures in
    waterfront condominiums; however, we cannot get any banks to loan to our buyers.

    I am happy to help you in any way. There is way to do this and reduce risk to the
    lenders. Thank you.

  7. Hi Ron,
    I see a huge issue with Condos now! 90% of what I list are REO’s, now I only can sell them to investors who can steal them due to the fact these things sit on the market until Banks drop the price low enough for an investor to profit from rental or a lease purchaes. This is driving values down in the Condo subdivisions at what I would say a alarming rate!
    Thanks, James

  8. Thanks Ron for seeing that this important issue is brought to the fore front.
    Condo owners and buyers have been discriminated against. As more owners cannot sell, they have to rent, thus lowering the percentage of owner occupied. If the % falls below 50% in a complex or building often buyers cannot get a loan despite having a strong downpayment.
    We have lots of condo inventory at a standstill that needs a common sense approach to invigorate sales.

  9. Ron, Thanks for taking a stand.100% of my business is condo sales. A very important segment in addition to the 1st time buyer is the older “downsizer”. Many of my clients are older and are downsizing from the big house in the suburbs to the urban downtown environment. Financing for condos is difficult. Your help is much needed and appreciated.

  10. Gilbert Rivera

    Thats great news, go for it, there is plenty of condominiums in Orlando market thats needs financing and many people that wants to downsize need it, We will appreciate your help a lot, thanks.

  11. The scary issue for financing condo communities is whether the association has the funds and reserves to keep up the community as a whole. If it doesn’t, the loan is far riskier than otherwise. As Debbie S. has experienced, many times the homeowners’ associations simply do not understand what it means to get the FHA approval for the whole complex. I went through all that with my mother’s association and finally got approval. The “Greatest Generation” is not well informed about FHA…the main response I got from communities members was fear that somehow Section 8 housing would be required. There was absolutely no knowledge base. Reverse mortgages, which would help many of our seniors out big time, are available through FHA, but again, the community must be approved as a whole. Misinformation abounds!

  12. Ron, this is welcome news. I’m surprised by the number of local condominium associations that are not currently approved by the FHA. This has become an increasing problem for condo sellers and qualified buyers alike.

  13. Kate Ball

    Thanks for giving this issue the attention it needs!

    I would add that condos are not only important for beginning buyers, but also for those who are ready for less house/more freedom! I am asked about available condos from singles of every age, retirees, people whose jobs require significant travel, etc. Well-managed, condos can be a terrific lifestyle!

  14. Bill Roberts

    The delinquecy rates are killing us. It has been our experience that REO properties are some of the biggest culprits. We have “qualified” buyers who can’t get FHA financing on REO’s in part because the Banks aren’t paying the condo dues as they carry these properties and hence are instrumental in driving the deliquency rates higher. We can’t win. We need legislation to force the Banks to come current or have FHA allow the property managers to not count the REO’s in the equation. Otherwise values will continue to decline and the only buyers will be investors making cash deals.

  15. Thank you so much!!!! I work the Los Angeles and Orange County market in CA. It is a nightmare trying to help clients shop for FHA approved condos! It’s an additional layer of difficulty with all the new condos expiring in July! HELP!!!!!!!!!!!!!!!

  16. Jeanne Smucker

    Thank you for adressing this dilema. I don’t think condo financing should be any different than a single family home.. Also the rules seem to be always changing. People are being punished for bying a condo when they get ready to sell. I hope they change some of the many rules. Thank you

  17. Thank you Ron.

    Condo sales are an important part of our business in the New England ski resort markets. There seems to be confusion and ought to be clarification from Fannie Mae on how to interpret elements of the dreaded “condo questionairre” that must be completed by a representative of the HOA in order for the condo project to qualify for underwriting on conventional loans. The reason most loan applications are rejected in our market is because of the percentage of investor owned units vs. the number of owner occupied and/or second home owner properties. The IRS has clear rules on what constitutes an investment property, but Fannie Mae doesn’t provide any guidance. Since most of the vacation condos in our market are of combined use – both rental and owner use, the representative completing the condo questionairre might conclude that any unit that is rented is an investor owned unit, thereby disqualifying the project for conventional financing. A clear definition of “investor owned” by Fannie would be a good start.

    Kyle Kershner
    Vermont REALTOR of the Year 2010

  18. DGR

    @ Debbie S:

    I empathize with you regarding Condo Associations not understanding the urgency of when banks or escrows requests documents from them to complete a purchase or a refinance. I know there are laws that require Associations to comply and cooperate, but sometimes the Mangement Companies and the Boards are ignorant as to their due diligence duties in order to help Seller members refinance or want-to-be owners purchase in their complexes. FHA rules don’t help matters, so thank you for bringing the problems related to purchase and refinance lending when it comes to condominiums.

  19. I agree that condos are a huge pain…and Cherle’s comment about more people renting their condos out, and creating a huge vicious cycle was another interesting thought. Thanks for what you’re doing for condo Buyers and Sellers (and REALTORS), Ron!

    I’m curious if anyone who’s mentioned the difficulty of financing condos has tried a portfolio lender? They may not be available in some places but I’ve used Cooper State (I hear Arlington bank has an option as well) for condos…and they don’t give a hoot about the condo or complex, just about the Buyer (the way it should be). An option for those of you who might not have already thought of it. This has helped a couple of my clients out this year!

  20. This is a great news, condos is an important part of our business here in Miami, south Florida.

  21. Hurray! Many buyers aspiring to buy condos here in Clearwater Beach, Florida would be happy about this. Definitely, a little loosening on the strict guidelines would be appreciated by them.

  22. Thank goodness! I’m glad to see that NAR is finally on the condo case. Now hopefullt Fannie Mae will jump on board too.

  23. Ron: Thanks for being pro-active with respect to FHA financing of condos. I specialize in the sale of condos and its darn confusing to me, let alone to condo board members who were previously FHA approved and then are told their status is expiring. They just don’t know what to do and I don’t know where to send them to for relevant help. (Anybody out there that can point me in the right direction?) Can anyone explain to me how this change in FHA status and having to re-apply every couple years is of benefit to anyone other than the half million new government workes hired since the adminstration change? If so, I’d love to hear it.

  24. Diana Germano

    Ron,

    Can you give us an update on this Condo issue?

  25. Thank you very much for looking out for condo owners and buyers. I am curious to know what changes might be made to give all types of properties a better chance to qualify for FHA financing.

  26. Good Job, Ron! I just don’t get it when there is a limitation for condos when actual market trend shows the growth of condo demand. Hoping to get more updates.

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