Thursday, February 16, 2012
Condo financing and FHA loans
Positively Palermo was sent e-mail and ask to spread the word about problems with FHA financing for condos. The article sent in states: "Buying a condominium is getting trickier for anyone who wants to put down only 3.5 percent and have the government insure their mortgage. The issue isn't just the borrower's financial wherewithal. It's the building's, and plenty of condos no longer get a thumbs-up from the Federal Housing Administration. Since Feb. 1, 2010, condo buyers haven't been able to secure unit-by-unit "spot" approval for FHA-backed mortgages if an entire building was not certified. Instead, the federal government set criteria to determine the financial viability of an entire building before deeming the project as FHA-approved, even if it had previously been certified. An approval lasts two years. The number of rejected buildings is adding up, due to bad paperwork and bad balance sheets as an increasing number of condo associations struggle with rentals, short sales and foreclosures. It is jeopardizing the plans of condo sellers who rely on the FHA's stamp of approval as a marketing tool and condo buyers who either want or need an FHA-approved building. The effects of those rejected buildings are likely to linger, particularly if more stringent down-payment requirements take effect for homebuyers, and could hamper any recovery of the housing market." Miss Penny Lane says: She might but a Lotto ticket today and once she wins will provide interest-free loans to anyone who wants a condo at the Palermo.
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11 comments:
HUD has a website database of certified condos. Palermo's certification apparently expired March 31, 2011. Urge the board to seek recertification. The website is here: https://entp.hud.gov/idapp/html/condlook.cfm
It is sad to see values at Palermo continue to plunge. I rented and wanted to buy, but the expired FHA certification nixed my loan with my lender.
If you do not have at least 10% to put down, I suggest you wait & save up until you do......you will avoid running into financial difficulty if learn to save & practise prudence.
Interesting. Can the board seek re-cert???
Just a follow-up to 5:19p--Why is it that folks rush to judgement based on so little information. There are many reasons for seeking FHA guarantee on a mortgage. Why would anyone just pell-mell assume from a blog post about certification, that the poster isn't a "saver" or isn't "prudent" in financial matters. Such a comment is so inappropriate and in this case, not even close to being an issue. Step-back from the keyboard and think about your comments before you post them. You don't know the individuals posting and so you really have no authority or knowledge to offer that kind of "advice" even if you mistakenly think it is well-meaning. It isn't.
FHA is the new Sub-Prime, but instead of investors losing money it is taxpayers. Bunch of B.S. if you ask me.
@ 2:02 PM - You obviously have no clue what your talking about.
FHA is a wonderful program.
I'm sure the taxpayers will be bailing you out on your windy Palermo condo that is worth probably half of what you paid for it.
FHA loans allow for 3.5% (or even less now) down, meaning people will walk away when prices go down. That is exactly what drove prices down here.
Without the certification for the condo financing a property in palermo won't happen....even with 20% or more down payment. B of A and Wells will not do it without HUD certification. :(
This is a tuff topic because many people and private investors along with Canadians frown upon FHA & HUD. I have to tell you one significant challenge Palermo faces with HUD & FHA is the amount of Full Time vs Part Time owners and Renters vs Owner Occupied units. FHA & HUD FROWNS and generally shuns away from Associations that have a large ratio of off site owners. If you ever think that you will get those certifications verify your ratios first with Management.
The onus for home buying, like all debt, should first be on the borrower. Many potentially bad mortgage loans could be prevented, if in the U.S. (like it is in Canada), it was illegal to walk away from a mortgage. Along with stringent underwriting, if people knew they could not walk away and that if they did, they'd still be on the hook for any bank loss, they would think VERY long and VERY hard BEFORE buying a home. There was wrongdoing by banks, no doubt and real estate agents and appraisers--there's enough blame to go around, we have learned a lesson--YOUR HOME IS NOT A PIGGYBANK--It is a place to live and renting is just fine.
I am hoping the same best work from you in the future as well. cottageme.com/article/canada/56.html
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