Real Estate listing: "FHA does not approve this community"

[Lisa loves Pooh]

What does that mean? It popped up on one of our listings on a townhome back on the market b/c the prior offer's financing fell through since FHA does not approve the community.

We are not going FHA route, but I am curious as to why FHA wouldn't lend in a specific community as opposed to a specific property.

TIA.

 

[clutter]

Perhaps too many homes are not owner-occupied? Is it a condo ownership, rather than a fee simple?

 

[LoraJ]

Maybe they are run by an HOA that has monthly dues but they do not have enough of a reserve.

My neighbor is selling his place and the lending company sent me (I'm the treasurer of the condo association) this weird FHA survey with all these questions that I had no clue how to answer half of them. I filled out what I could and sent it back to the guy saying I had no clue what half the stuff meant. He was nasty to me and then tried to go over them one by one and he did not know how to answer them either and said he would get back to me. Never got back to me. But he had also stated since we did not have a reserve account, it would probably be a deal breaker. Didn't matter how much money we had in our active account.

 

[happygirl]

I have aloways heard FHA has very strict rules about the houses they will loan money on.

 

[The Mystery Machine]

Maybe the association is in litigation? Who knows?

I will bet it is probably more of what LoraJ/clutter says and their reserve for the condo association does not meet there standard or the owner occupied thing.

Also you have the hedgefund issue. I don't understand all of it however I know that wealthy corporations buy discounted properties with the agreement not to sell it. Maybe it does not qualify because of that?

A person buying into that property would need to put down 20%.

I am sure I don't have it 100% right however I know that hedgefunds are big into buying condo properties right now.

 

[Christine]

Didn't they used to "approve" communities so that a broker could do on the spot approvals for FHA loans? And that only a certain percentage of homes in the community could be FHA. It could be that they aren't approving the community because they are no longer accepting spot approvals (they've apparenty tightened up on this) or maybe there are too many FHA loans in the community.

 

[Lisa loves Pooh]

Hmmm--interesting.

I really have no clue myself--but I know we are avoiding actual houses that cannot be FHA approved due to their condition. But this was the first time regarding a neighborhood.

 

[BellePrincessBelle]

It's most likely the owner occupancy ratio to rental or the financial reports for the HOA as others have said.

 

[golfgal]

It is also possible that the community is in a flood zone or some other hazard zone so FHA won't approve homes in that area.

 

[Lisa loves Pooh]

Thanks for the info. As I said, we are not using FHA. But I do use that as a guide and if they are denying loans on properties for anything other than it is above their max--we'll just stay away from it.

 

[Robinrs]

http://raincityguide.com/2009/06/27/fha-condo-approval-process-major-guidline-changes/