Here in Palm Beach County, condo's have been hit even harder than single family homes in terms of % value declines. It looks like these new HUD guidelines may serve to exacerbate that problem.
To give you my "Readers Digest" analysis...in the past, FHA loans could be made on condo projects only if they were FHA "approved", but there was a little loophole: something called "spot" approval. The "spot" approval appears that it is going to be eliminated after Feb 1st 2010. Next...All currently approved projects will now have to re-approved..a very lengthy process considering staffing and efficiency issues...additionally, the eligibility requirements have been changed (tightened) AND the projects must be re-certified EVERY TWO YEARS! There is 1 exception to having to re-approve a project: If that project received approval AFTER 10/1/2008.
It looks like HUD/FHA really is hesitant about lendng money for condo purchases...here are some of the approval requirements:
- No entity may own more than 10% of a projects units...this applies to developers who rent vacant/unsold units (this is bad for the "fractured condo" projects)
- No more than 15% of owners can be 30 or more days behind in their condo fees
- The project can not have more than 30% of units insured by FHA
- Association must have reserves of at least 10% of the total budget
- More strict insurance requirements
HUD approved condo list search page
If you are the owner of a condo here in Palm Beach County and would like to discuss selling your unit in light of the above, please call us right away: 561-432-5202
