FHA Condominium Recertification May Hurt Condo Sales

viridian condos in nashville08/23/10 HUD issued updated/revised processing requirements for recertifying FHA approved condominium projects that expire 12/07/10. In this same document HUD mandated that all projects which received approval prior to October 1, 2008, will require recertification on or before December 7, 2010 (more than 10,000 in the United States). Further, every FHA project certification will require recertification 2 years from the date of issuance.

Should a FHA approved condominium project not complete the recertification process prior to 12/07/10, it will convert to “Expired” status. FHA case numbers will not be issued on condominium projects with “Expired” status, hence, FHA backed financing will no longer be available in those projects.

FHA Recertification in Simple Terms

The long story short is that dozens of FHA certified Nashville condo projects are set to expire in just days. There is no way to determine which of these projects are working through the recertification process, but as of December 3rd there are a few notable condo projects that sit in the crosshairs: Bristol on Broadway, the Continental, Encore, Four Seasons, Georgetown, Normandy Place, Park at Melrose, and Werthan Lofts phases IV & V.

For current owners, this will have a material impact on re-sales if prospective buyers do not have access to very low downpayment FHA loans. I highly recommend that you check with your condo association manager if you happen to own a condo or townhome in a project that happens to be slightly older to ensure your FHA certification is not in jeopardy.

Search for approved condo projects and developments directly on HUD’s website: https://entp.hud.gov/idapp/html/condlook.cfm

  • http://StephanieCrawford.net/ AgentSteph77

    I wish FHA and FNMA would just get out of the “certification” and “warrantable” business all together. These rules hurting condo prices. Shouldn’t the market set price? Ugh. Frustrating.

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  • http://www.granthammond.com/ Grant Hammond

    It looks like HUD has given condo projects that did not reapply for certification a short reprieve:

    FHA announces extension of condominium project approvals with an expiration date of December 7, 2010. Below are the extension dates based on five-year timeframes with the exception of those condominium projects with original approval dates from 1972 -1985.

    1972 – 1980 was December 7, 2010 now December 31, 2010
    1981 – 1985 was December 7, 2010 now December 31, 2010
    1986 – 1990 was December 7, 2010 now May 31, 2011
    1991 – 1995 was December 7, 2010 now July 31, 2011
    1996 – 2000 was December 7, 2010 now August 31, 2011
    2001 – 2005 was December 7, 2010 now September 30, 2011
    2006 – 2008 (Sept) was December 7, 2010 now March 31, 2011

    The extensions were granted to reduce the impact of processing and reviewing the number of project approvals expiring at the same time while recognizing current housing market conditions. Lenders and/or other interested parties are encouraged to begin the re-approval or recertification process as early as possible as it is not anticipated that any further extensions of project approvals will be issued.

    The Condominium look-up page and the FHA Connection databases were updated on December 7, 2010 and now reflect the extended expiration dates. The links to the sites are:

    Condominium look-up page: https://entp.hud.gov/idapp/html/condlook.cfm
    FHA Connection: https://entp.hud.gov/clas/index.cfm

  • Falcon2

    Be careful what you wish for…the sad truth of it is that if not for FHA and FNMA it doesn’t appear that there would have ANY activity over the last 2 years, unless you think we’d have done much business at rates of 6% or more. The private sector was practically non-existent in the mortgage market during this time and is still mostly so today. Without a gov’t guaranty to buy this paper we’d be in very bad shape. The challenge we have now is how to gradually wean our housing market off of the governement teet (as Alan Simpson might say :)) without killing the recovery. Lots of political discussion about that right now and though I never thought politicians would find the courage to end the mortgage interest tax break it looks like the budget pressures and other factors may just be enough to start phasing this out soon.

  • http://www.granthammond.com/ Grant Hammond

    More to your point Falcon2, I heard a mortgage broker say that 84% of all condo mortgages written in 2009 and 2010 were FHA backed. While I do not have solid stats to back up that statement, I believe it.

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