Handout at Board Meeting Regarding Approval for FHA Loans

   

Below is the handout I plan to use at our next Board of Directors meeting.

Comments by Paul Rasmussen, Unit 305, to Board of Directors 23 October 2014 regarding

FHA Loan Approval Cons and Pros

Is approval of our Market Street at Town Center Condominium for low-down-payment FHA loans in the best interests of us unit owners?  This is a question that our Board of Directors must answer within a few years, when our percentage of owner-occupied units again exceeds 50% as required to obtain FHA approval.  We unit owners may want to consider the issue before our Board must decide whether to apply for FHA approval for our Condominium. 

I raise this question because I know of one condominium in our 20190 zip-code where the board of directors voted unanimously NOT to seek renewal of its approval for FHA loans, even though it appeared to meet all criteria for FHA approval.  At the FHA web site, you can see a listing of  the condominiums in our 20190 zip-code that have received FHA approval--including those for which that FHA approval has expired.* 

Why might a condominium board of directors decide NOT to seek FHA loan approval?  It could be because a relatively high percentage of FHA buyers might need to lease their unit after a relatively few years of ownership.  I discussed this potential problem in May 2013 in a post on Bob Babcock's leasing-bylaw-amendment blog.* 

Fortunately, our amended leasing bylaw provides our Board of Directors "discretion to grant an exception and permit the Unit Owner to lease their unit due to Hardship," thereby possibly preventing some units from going into foreclosure.  But every hardship exception the Board grants extends the time required to increase our owner-occupied percentage to the 65% level required by the amended leasing bylaw.  For more information regarding such "Hardship" exceptions, see Policy Resolution 11-14 and the amended leasing bylaw.* 

Another possible reason some condominium unit owner associations may opt NOT to seek FHA loan approval is to avoid stringent FHA requirements.* 

Having our Condominium approved for FHA loans should increase the number of potential buyers of units in our Condominium, thereby theoretically increasing the market value of our units.  Also, with a larger pool of buyers, perhaps units currently occupied by tenants will become owner-occupied at a faster rate, thereby moving our Condominium more quickly up to the 65% owner-occupied level. 

If, after considering the pros and cons of FHA approval for our Condominium, you conclude that FHA approval is or isn't in the best interests of  Market Street at Town Center Condominium unit owners, I encourage you to inform our Board of Directors of your opinion. 

         *The asterisks above indicate instances where related information is available on the internet.  To see the above presentation with the links included that take you to that internet information with a tap or a click, please see my post on Bob Babcock's leasing-bylaw-amendment blog.  The easiest way I know to go there is to Google  mstc uoa  to see my post entitled "Useful Links for Unit Owners."  From there, tap or click the link associated with "Bob’s leasing-bylaw-amendment blog."

Note added 28 March 2015 for those of you viewing this post on-line here now:   Click here to go directly to the above presentation that includes the links the mentioned above.