Realtors Push Condos for FHA Certification

Loura K. Sanchez | Wednesday, May 28, 2014 | Community Associations Miscellaneous

With the changes that occurred in seeking FHA certification several years ago, many condominium associations decided it was easier to stop seeking certification and let buyers find other types of mortgages to finance the purchase of units within the condominium community.

Well, real estate professionals are pushing back. A recent Washington Post article, and several follow up stories are reporting that several statewide real estate associations are launching educational campaigns to educate board members on why FHA certification is good for communities.  The Washington Post article reports that in the last four years since the certification process with FHA changed, the number of FHA loans in condominium communities has dropped by over 50%.  It was also reported that in Ohio a seller ended up selling $10K below market because there was no FHA certification. This is something we cautioned might happen in our blog in 2011, shortly after the changes in the certification process.

If your community isn’t FHA certified, and you would like more information about how to get certification, feel free to contact Elina Gilbert at 303-991-2010 or read our article on the topic for an overview. 

Comments

I am trying to see both sides of the story here, as I try to do in every aspect of life, but my first response is WHY are the real estate professionals pushing the communities to be certified? Is it too hard to find a community for buyers to purchase which takes money out of their pockets or do they not want to do the work to find another community which is certified? Do these companies recognize how much it costs a community every two years to be re-certified and the ability for a small community to pay for this, not to mention the time it takes from Board members if they are self-managed, just flat out doesn't make it worth it to them. Also, having this expense in a budget every two years can increase dues which isn't beneficial either. I am confident there is another side to this story but I tend to support my communities who can't afford the expense and I personally understand the plight of buyers needing FHA financing but have found other routes and a conventional loan through a lender. There may be ways around FHA financing for buyers and perhaps this is another example of RE professionals thinking they know what managing a community is about and how to do it better? Please feel free to show me the other side of the story.

Easier, yes, but also less expensive! These days, many CICs do not discretionary funds for something like this. The process is very tedious. The cost has come down, as companies have begun to offer this service competitively. Keep in mind, too, that many CICs cannot qualify, usually based upon number of renters, amount of delinquency, or lack of contributions to reserves. It seems like the Realtors are being self-serving. The decision to seek certification is one that needs to be made by each association's board, using its best discretion, keeping in mind the business judgement rule as well as its fiduciary duty. However, it is NOT the responsibility of an association to make it easier for people to sell their homes or for Realtors to make their living, although it certainly MAY be in its best interest to do anything that will help raise property values.

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