(Originally published September 8th, 2009.)
ATTENTION ALL CONDO BUYERS AND REALTORS WITH CONDO LISTINGS:
If you’re planning to get an FHA mortgage on a condominium, you had better act fast! As of October 1, 2009, all FHA lending on condo units will come to a screeching halt.
FHA is revoking the approvals on virtually all condo developments. That’s right – you read correctly. After October 1st, FHA financing might no longer be available on your condominium project until it is re-evaluated by The US Dept. of Housing and Urban Development, and (hopefully) added back to their approval list.
- Only projects approved AFTER October 1, 2008 will still be valid.
- Only FHA approved lenders or FHA approved builder/developers can submit a condo approval package to HUD.
- Spot approvals are GONE.
- And the piéce de résistance, FHA will track loan concentrations within projects to prevent over-concentrating risk. That means your loan will be the first to exceed the limit. (Sarcasm added by me.)
Have you ever tried to get a condo project approved with HUD? It’s a grueling bureaucratic process that takes an exorbitant amount of time – often to find that the project was denied, for reasons FHA can’t explain. I’d rather write a Doctorate thesis while getting root canal.
So what should prospective condo buyers and condo-listing realtors do? If you are a buyer with less than perfect credit, get off the fence and BUY NOW. If you can’t close by October 1st, or you are a condo-realtor looking for a hard wall to bank your head against, all hope is not lost!
Conventional financing and PMI is still available for condos. However, it’s critical that all buyers work with a seasoned and competent mortgage professional and be thoroughly prequalified as early as possible.
Most problems, if uncovered early enough, can be addressed BEFORE they explode into deal killers – but not the week before contracts are signed. Early intervention is the key. If you are a prospective buyer – or you are a realtor working with one, make sure a complete financial and credit analysis is performed MONTHS before finding a new home. This extra time can mean the difference between a sanitized and completely qualified buyer – and a purchase transaction falling apart at the 11th hour.
Since 1992, Warren Goldberg has helped thousands of clients own their homes, refinance their mortgages, restructure their debts, and invest in real estate. Warren is known for his wide knowledge of mortgage products and wealth-creation strategies.