Here is subject that I know a lot about and I’m not too happy about what I’ve been reading and hearing. Apparently, the number one home ownership type that has been foreclosed upon the most in the USA is condos. That has created a snowball effect. If you have many foreclosures in your community that means that community most likely has delinquent dues. If enough condo units have delinquent dues, that hurts the financial viability of that association.
When a condo community is not healthy financially, FHA and VA will not approve new loans for buyers of that community. That is a very bad thing if you want to put your condo up for sale. What are your options? What do you do if you can’t sell? You have lost 75% of the possible buyers in the market by not being FHA/VA approvable for a loan. I only closed two conventional loans in 2011. Most buyers just can’t afford to put down the 5-10% down payment. Why should they have to when VA is no down payment and FHA is 3.5% down payment.
You try for several months to sell your unit and after getting a contract on your home, you find out that FHA has taken your community off the “Approved List” and the loan can’t close. However, the good buyer agents always ask that magic question first” Is your community FHA/VA approved’. If they get a no, they don’t even bother to show the condo.
You are livid! You go straight to your condo board and ask what happened. They state they just don’t know what happened. Your community is nice and financially healthy they say…you have read the numbers yourself. In fact, you go to the condo meetings and try to always vote. What IS going on????
The problem now could be you have too many renters in your complex. If you extend past a percentage of approx.52% renters, FHA gets really nervous and again takes you off the list. Remember those condo meetings with discussions about having renters or not? And if so, how many should you have?
Lastly, the problem may be that the condo board just simply was not aware of having to get re-certified by FHA/VA and didn’t go through the process. Oh my! Sometimes, the condo management company is responsible for insuring this gets done in a timely manner.
Bottom line: You must stay financially healthy, guard against too many renters and make sure your board knows how to keep certified. Otherwise, the odds of selling your condo drastically reduce!