How Do Delinquent Homeowners Association (HOA) Dues Affect FHA Mortgages?

By
Mortgage Banker with Prospect Mortgage NMLS #151088
http://actvra.in/49Lh

How Do Delinquent Homeowners Association (HOA) Dues Affect FHA Mortgages?

As part of the FHA condo project approval process, various aspect of the Home Owner's Association must be evaluated.  One such aspect is the delinquency rate of the current owners.  FHA guidelines require that no more than 15% of the total units can be in arrears on their condominium association fee payments.  Arrears is defined as more than 30 days past due.  This does not include late fees or other administrative expenses. The 15% includes all units (occupied, investor, bank-owned, vacant).

Should the delinquency percentage exceed 15%, exception requests may only be considered on a case-by-case basis.  The mortgage lender can submit a request to the jurisdictional HOC for the property.  No exception requests can be processed by the mortgage lender under the DELRAP option. Of course, FHA does reserve the right to reject any exception request received.

In order to be considered for an exception request, the following requirements must be met:

  • No more than 20% of the total units can be in arrears (more than 30 days past due).
  • The HOA provides a report for the past six months that reflects the history of unpaid assessments.
  • The HOA current reserve fund balance and current operating results (documented HOA Balance Sheet and Income/Expense financial statements dated less than 90 days at the time of submission) evidences excess available funds in the amount of the outstanding arrearage.
  • A review of the HOA financial statements and verification of the reserve account balance reveals that the HOA has sufficiently accounted for bad debt and arrearages.
  • A current reserve study that is no greater than 24 months old supports the sufficiency of the current HOA assessments to meet the project component replacement needs.
  • The HOA provides evidence of actions to collect the unpaid arrearages, including legal action, execution of payment plans, or other similar efforts.
  • The exception terminates with the expiration of the current condominium project approval.

HOA Dues delinquencies is just one of the many aspects of the FHA condo project approval process.

 

 

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It is always advisable to consult with a knowledgeable lending professional when navigating today's turbulent mortgage and real estate marketplace.  I am committed, qualified and equipped to help you evaluate your options!

 

Also check out:

Conventional Financing Mortgage Program Overview/Updates

FHA Financing Mortgage Program Overview/Updates

Georgia Dream Down Payment Assistance Program Overview/Updates

HomePath Financing Mortgage Program Overview/Updates

USDA Financing Mortgage Program Updates  

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Rodney Mason is a Sr Loan Officer located in Atlanta, GA.  He is also 203K Renovation Loan and HomePath REO Property Specialist.  He can be reached at (404) 591-2453.

Providing financing for cities across Georgia including: Acworth, Albany, Alpharetta, Athens, Atlanta, Augusta, Austell, Avondale Estates, Blairsville, Bloomingdale, Blue Ridge, Bogart, Brunswick, Buckhead, Buford, Canton, Carrollton, Cartersville, Chatsworth, Clayton, College Park, Columbus, Commerce, Conyers, Covington, Cumming, Dahlonega,  Dacula, Dalton, Dawsonville, Decatur, Doraville, Douglasville, Duluth, Dunwoody, East Point, Fayetteville, Flowery Branch, Gainesville, Greensboro, Hampton,  Hapeville, Hinesville, Hiram, Jackson, Jefferson, Jonesboro, Kennesaw, Lagrange, Lawrenceville, Lilburn, Lithia Springs, Macon, Madison, Metter, Morganton, Morrow, Newnan, Norcross, Oakwood, Peachtree City, Pooler, Richmond Hill, Riverdale, Rome, Roswell, Sandy Springs, Savannah, Scottdale, Statesboro, Stockbridge, Stone Mountain, St Marys, Sugar Hill, Suwanee, Thomasville, Thunderbolt, Tucker, Tybee Island, Valdosta, Waleska, Warner Robins, Waycross, Wilmington Island, Winder, Woodstock, and many more.


Providing financing for cities across Alabama including: Alabama Port,
Anniston, Athens, Auburn, Bessemer, Birmingham, Boaz, Bridgeport, Cedar Bluff, Chickasaw, Clayton, Coden, Dauphin Island, Decatur, Dothan, Eufaula, Fairfield, Fairhope, Florence, Foley, Forestdale, Fort Morgan, Fort Payne,Gasden, Grand Bay, Gulf Shores, Heron Bay, Homewood, Hoover, Jasper, Josephine, Madison, Meadowbrook, Midfield, Mobile, Mon Louis, New Hope, Orange Beach, Oxford, Oyster Bay, Phenix City, Prichard, Rainbow City, Saraland, Satsuma, Scottsboro, Selma, Troy, Theodore, Tillmans Corner, Trussville, Tuscaloosa, Vestavia Hills, Warrior and many more.

 

               

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Comments 17 New Comment

Rainmaker
1,762,932
Roy Kelley
Retired Real Estate Broker, Maryland Blogger

Good post.  I will post it on my Facebook page.

 Blooming for you!

July 14, 2011 08:05 AM
Rainmaker
680,445
Lanre Folayan
I don't make promises. But I do deliver results.
Keller Williams Capital Properties-Buy a home in Washington DC. Sell a home in Washington DC

Rodney I was trying to get a hold of a listing agent yesterday. I wanted to ask him about an offer that I wanted to submit to him on his condo listing. He tells me that the Delinquency rate is 22% so a FHA will not work. But I read your comment in your blog where you said

Should the delinquency percentage exceed 15%, exception requests may only be considered on a case-by-case basis.  The mortgage lender can submit a request to the jurisdictional HOC for the property.  No exception requests can be processed by the mortgage lender under the DELRAP option.

I sent the e-mail to my lender. So hopefully we can work something out. Suggesting this one for a feature. Great post.

July 14, 2011 11:29 AM
Rainmaker
342,154
Rodney Mason
FHA 203K, USDA, VA, HomePath Renovation Specialist
Prospect Mortgage

Roy...Thanks for the Facebook post.

Lanre....According to the HUD announcement, they wont allow more than 20% though. 

  • No more than 20% of the total units can be in arrears (more than 30 days past due).
  • July 16, 2011 09:08 AM
    Rainer
    104,362
    Wayne Thompson
    CMB
    Walden Mortgage Group

    Rodney...Solid information on an issue most people are unaware of. I have run into this lately and it is getting more and more common. I now get the HOA letter before we start the loan process.

    Wayne

     

    August 15, 2011 12:15 PM
    Rainmaker
    342,154
    Rodney Mason
    FHA 203K, USDA, VA, HomePath Renovation Specialist
    Prospect Mortgage

    Wayne.....Doing as much upfront as you can is the best.

    August 15, 2011 07:47 PM
    Rainmaker
    342,154

    Rodney Mason

    FHA 203K, USDA, VA, HomePath Renovation Specialist
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