As a result of these programs, the group will be appealing to FHA in hopes of having the criteria put on temporary hold until community associations have the opportunity to recover from the economic hardship created by the unrealistic financing terms owners accepted to purchase properties during the inflated housing boom. Unless the associations are able to do so, they will not be able to obtain the FHA approval.
Friday, June 1, 2012
ACM Senior Staff Member Participates in Program About FHA
On May 23, 2012, Hazel Wilkinson, Vice President of Client and Administrative Services, participated in a program held with the Howard County Housing Authority, the Community Associations Institute, Chesapeake Chapter, local realtors and attorneys specializing in community association law to discuss the impact of Federal Housing Authority (FHA) regulations regarding financing for common interest communities. In 2009, FHA discontinued the practice of allowing “spot” approvals for financing on an individual basis. The common interest community must now be FHA Certified before anyone can obtain FHA financing. Unfortunately, FHA regulations state that no more than fifteen percent (15%) of the membership in a community can be thirty (30) days or more delinquent. Additionally, no more than fifty percent (50%) of the units in the community can be rentals. It is these two (2) criteria that are creating an issue for many associations and hindering their ability to become FHA Certified. Due to the recession and the economy, many community associations have experienced a dramatic increase in delinquent assessments. Boards of Directors and Management Companies are generally unable to foreclose since in most cases there is more than one (1) mortgage and no equity in the property. Additionally, even though judgments are obtained against delinquent owners, there is no guaranty the association will recognize payment. The situation is also forcing many to make the decision to rent the unit rather than sell it in today’s market. The community association finds itself, through no fault of its own, in a situation where there are owners that are unable to pay assessments or unable sell the unit to an entire segment of the market.