BIG NEWS FOR CONDOS
Looking to buy a condo? 2012 FHA guideline changes are in the works! Getting an FHA loan as a buyer in Boulder just got a whole lot easier. Need to sell a Boulder condominium? More communities now qualify for FHA loans! Where does this good news originate? FHA modified its guidelines making it much easier for condominium communities to achieve FHA status. Consider that 3 out of 5 entry level buyers (under $460,000) use low down payment loans such as FHA to buy – and you realize it is a huge advantage for a seller’s community to have access to the largest pool of buyers out there!
This is the sort of guideline adjustment from HUD and FHA that is going to have an immediate impact on the housing market.
2012 FHA guideline changes
Effective September 13th, 2012, the Federal Housing Authority (FHA) made significant changes to the guidelines it uses in making loans to consumers. These new guidelines will have a major impact on condominiums nationwide and could spark a bigger revival in the local housing market.
Specifics of the guideline changes
The four guideline modifications involve board member responsibility for HOA statements; the ratio of commercial to residential space in a community; investor ownership of a percentage of units by one major player; and how late dues payers in a community affect FHA funding for the association.
Monumental 2012 FHA guideline changes To Ownership Percentages
The Federal Housing Authority (FHA) will now allow a single investor to own up to 50% of the units in a condominium community. The prior limit was ten percent. Trout Farm, located near Folsom and Valmont in Boulder, will be an immediate beneficiary of this dramatic change. A single investor has owned a large swath of condos in that community since its inception. Now, for the first time, the community can become FHA compliant – provided it meets all the other existing guidelines.
FHA will also allow a larger percentage of a community to be commercial space. Again, this is great news, as “Mixed Used” projects have been very popular of late. Mixed Used creates commercial space – frequently restaurants, pet stores, retail and office space, etc., on the ground floor and residential condo space on upper levels.
One Boulder Plaza is a great example of this concept. And while most units in One Boulder Plaza are priced out of FHA limits ($460,000 in Boulder), the permanently affordable condo in that complex will now be eligible for a 3 and 1/2 percent down loan (again, provided the community applies for and meets all FHA guidelines).
The rules change regarding board members changes the language of what those volunteers on boards and HOA’s are attesting to. This change is appreciated by the Community Associations Institute. There was previously the perception that volunteer owners could be subject to lifelong responsibility for statements made regarding an HOA and its community.
Finally there is a change regarding late payments of dues. This 2012 FHA guideline changes and adds flexibility for communities dealing with owners who are behind on payments and still allowing the community as a whole to qualify for FHA loans.
Getting FHA status
This past year I had a firsthand experience in assisting a community with regaining FHA eligibility. The process is arduous and requires adherence to some exact guidelines that are not common sense. Should your community need to become re-certified for FHA, I strongly encourage retaining a professional from the beginning to assist in this process.
Beyond Boulder, expect to see these guideline changes have an immediate impact on ski towns where condo communities frequently have a large percentage of non-resident owners, commercial space on the ground floor and/or investors owning a large percentage of units. This FHA guideline change is great news for all of Colorado.
Sources for this article included Robert Freedman’s article in the Nov/Dec issue of Realtor Magazine entitled FHA revises Condo Rules and The Los Angeles Times article FHA eases burdensome condo financing rules by Ken Harney.
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