FEATURE
Are You Maximizing Your Community's Home Values? The Benefits of FHA Certification for Condominium Developments By Mike Kirkland, MLO, CPA
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ommunity association boards have a fiduciary duty to preserve and enhance property values in their associations. This may include taking steps to make homes financially attractive to potential buyers. There is a myriad of ways to finance and refinance condominiums including a long list of conventional mortgage options. Perhaps less familiar are programs initiated by the U.S. Department of Housing and Urban Development (HUD), U.S. Department of Veterans Affairs (VA), and other targeted programs that all have unique attributes that are attractive to home buyers. HUD’s Federal Housing Administration (FHA) programs provide some desirable features for potential buyers or those looking to refinance but require the community to obtain FHA approval and become certified. Some of the useful benefits of FHA approval include a federal guarantee, reduced
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Quorum July, 2019
down-payment options and the only government insured Home Equity Conversion Mortgage (HECM) program allowing qualified condominium unit owners to obtain a reverse mortgage. Unfortunately, very few condominium developments in the Coachella
complexes, only 18 are presently approved for FHA transactions. We see a mix of circumstances that include communities that once had FHA certification but have let it expire, communities that applied and were rejected, and many communities that have never applied.
"Some of the useful benefits of FHA approval include a federal guarantee, reduced down-payment options and the only government insured Home Equity Conversion Mortgage (HECM) program allowing qualified condominium unit owners to obtain a reverse mortgage." Valley have FHA approval. This situation has resulted in the inability of sellers, buyers or those wishing to refinance from taking advantage of the FHA benefits. The magnitude of the problem is grave and impacts home values throughout the Valley. Of the estimated 500 Coachella Valley associations that govern condominium
Roughly 20 percent of those seeking new homes or to refinance would prefer FHA products over conventional options and if your community is interested in attracting first-time home buyers or retirees, FHA certification would make your community even more attractive. When it comes to selling a condominium
that has FHA approval, you can expect more offers and faster sales. Homes in FHA approved complexes take less time on the market and generate higher sales prices due to increased competition and demand. This means higher property values for everyone. There are also very positive attributes associated with refinancing homes in FHA approved communities. These include less stringent credit requirements and higher loan to value ratios that are particularly attractive to retirees and first-time home buyers. A not her benef it of having FHA certification is that homeowners can take advantage of a Home Equity Conversion Mortgage (HECM), the FHA’s reverse mortgage program. A HECM loan enables the homeowner to withdraw equity in their home. This is obviously very attractive to seniors. Here in the Valley, we see many baby boomers wanting to change
