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Wife and I fell in love with a condo. But it isn't FHA approved. The condo is bank owned, and is offered for a great price.
I see that the condo community used to be FHA approved, but the lost it. I don't know if that means they did something wrong or they just didn't renew it. My realtor is going to check on it for me.
Has anyone been in a similar situation? How long did it take for the condo to become FHA certified? I was hoping that the lender would accept a lease so that we can move in until they get it all sorted out.
They tend of lose their HUD/FHA approval when the owner to tenant ratio gets too high. The only way to remedy that is increase number of owners and decrease number of tenants.
Other ways to lose certification is when too many units are far behind in paying their HOA association dues.
A third way is if too many units already have HUD/FHA financing on them.
However, sometimes a complex loses its certification because it has too many tenants. Then the tenant- owner ratio changes back to an acceptable number but no one bothers to re-apply for HUD approval.
Best thing to do is to have your real estate agent check with the management company or condo board and see why they have lost their approval.
The above are not the only ways for a condo complex to not be FHA approved. Many complexes in my area have chosen not to renew their eligibility. Too much red tape they have to go through and they rather not do it. It doesn't mean those complexes don't qualify. They just don't want to play the game.
Also if one entity owns more than 10% of the units, it's tough. Can you go Homepath? Conventional? I wouldn't think that the lender who owns the house would want to become a landlord and rent it to you. They are hoping somebody will swoop in with a cash offer, or go with options that are presently available.
My condo complex decided to not renew FHA certification due to the red tape/cost, so there's not necessarily something 'wrong' if a condo is no longer FHA approved.
I've heard it can take anywhere from 30 - 90 days, but perhaps one of our friendly neighborhood real estate agents may be able to chime in with more info.
Consider that when you go to sell, FHA loans may no longer be a large part of the market the way they are now. As it is, FHA loans are so over the top expensive, fewer people are interested in using them. It may have little effect on the eventual value.
The trouble with Condos you have to look into the association, my friends had a pre approved loan and a good downpayment on a great condo, then the bank informed them that the associations are aloud 10% in the bank this association only had 3% meaning they wouldn't have enough for maintenance and repairs and could go bankrupt very soon , bank told them, go buy a house instead.
To answer your question: "How long does it take for a condo to become FHA approved?"
There is a lengthy list, most readily available in the HOA docs, some needing signatures from the current HOA BOD to be gathered. Gathering the items on the list may take longer than how long it takes for HUD to approve the condo. FHA/HUD states they will review the submission within 30 days. That is called an HRAP when HUD reviews/approves the documents. If it's not approved, they will tell you what is missing and you can resubmit (and not have to wait 30 days again, more like one or two days). There are also lenders (banks) out there that will approve the condos (using the same checklist) and take the responsibility of the approval (because every bank can use that approval issued). That process is called a DELRAP, because it's a delegated approval.
There are contract processors out there that do nothing but submit condo approvals to HUD - it's a highly specialized area of mortgage banking. You (or someone) can expect to pay $700 to $2500+ for this service. Your best (cheapest) bet is to find a mortgage lender that does DELRAP. Find a seller willing to work with you may be difficult too, just too many are opting for conventional financing.
To answer your question: "How long does it take for a condo to become FHA approved?"
There is a lengthy list, most readily available in the HOA docs, some needing signatures from the current HOA BOD to be gathered. Gathering the items on the list may take longer than how long it takes for HUD to approve the condo. FHA/HUD states they will review the submission within 30 days. That is called an HRAP when HUD reviews/approves the documents. If it's not approved, they will tell you what is missing and you can resubmit (and not have to wait 30 days again, more like one or two days). There are also lenders (banks) out there that will approve the condos (using the same checklist) and take the responsibility of the approval (because every bank can use that approval issued). That process is called a DELRAP, because it's a delegated approval.
There are contract processors out there that do nothing but submit condo approvals to HUD - it's a highly specialized area of mortgage banking. You (or someone) can expect to pay $700 to $2500+ for this service. Your best (cheapest) bet is to find a mortgage lender that does DELRAP. Find a seller willing to work with you may be difficult too, just too many are opting for conventional financing.
That's a lot of good info! It may prove useful to someone else in the future.
I have decided to give up on this one. I found an excellent single family home. I made an offer on it, and as of last week we are in contract to close mid May.
Except that the OP closed on the home seven months ago.
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