1. If it isn’t an FHA loan being used to purchase a unit, chances are the buyer is an investor. Because over 80% of buyers are now using FHA loans, the remaining buyers are usually investors who cannot use an FHA loan to purchase. An investor brings in renters to units, including Section 8.
2. FHA loans used to be for the downtrodden. Now almost everyone uses FHA loans to purchase their homes. Look at these numbers:
a. FHA loans can be used for loans up to $729,750 on condominiums
b. The median credit score for an FHA loan used to be around 640, it now is approaching 700.
c. FHA buyers are all fully documented buyers. There are no stated income programs or lite-doc programs. This means that the buyers have proved both income and assets to qualify for their purchase.
3. To use an FHA Loan your HOA must be FHA approved. Previously very few condo associations became FHA approved. An individual unit owner could apply for a ‘spot’ approval, one that was done at the time of purchase. This approval was only good for that unit and every time a new unit was sold the unit owner had to apply for this ‘spot’ approval. This process was outlawed in February of this year.
4. All previously FHA approved condo associations were ‘grandfathered’ in with the new regulations. However, each of these associations must be re-approved in 2010.
5. HUD’s passage of these new regulations will impact the value of your association by making it more or less desirable to buyers. FHA approved associations will be worth more. Non-approved FHA associations will be worth less.
