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FHA Certification for Condos is Harder Now - More Expense, More Time - Is It Worth It?

At the end of this blog are excerpts from two recent news stories published on CNN's website. One article suggests that there may be more federal funds pumped into the effort of saving owners from foreclosure and stemming the increases in foreclosed homes. And one says that Fannie Mae (FNMA) needs funds. (See excerpt below.) And the HUD website explains that the FHA funds may run out by mid 2011.

Not to be critical of doling out money to help homeowners, but the question eventually has to be: how much more money can be pumped into the system before the faucet runs dry? And, how much longer can the owners hang on who are paying their mortgage as the home prices are driven down by short sales, bank owned property auctions, and the failing economy?

This is especially pertinent to condo associations because FHA has made some changes to the certifiability of condo units for FHA funded loans. FHA has done away with spot certifications and is requiring project certification for Condo units to qualify for consideration (note that certification does not guarantee a loan but does allow applications on projects that are certified). If the FHA loans dry up for condo associations for lack of available funding (or other properties, for that matter), certification will no longer be meaningful.

For the summary of changes and questions the recent FHA changes raise, visit the E-News archives at www.californiacondoguru.com and read the latest E-News.

To see what is happening in detail with the FHA certification and also with the issues related to future funding, visit www.HUD.gov.

Here is just an excerpt from the article touting the possibility of more funding to be offered to assist owners with regard to currently-owned property:

"Housing help for unemployed, underwater borrowers
http://money.cnn.com/2010/02/19/real_estate/housing_help_unemployed/index.htm

By Tami Luhby, senior writerFebruary 19, 2010: 7:36 AM ET

NEW YORK (CNNMoney.com) -- Under pressure to do more for troubled homeowners, President Obama is expected to announce on Friday a $1.5 billion program to help borrowers in the five states hit hardest by the housing crisis.

The initiative calls for pumping money into state housing agencies in California, Arizona, Nevada, Florida and Michigan to fund programs to prevent foreclosure for people who are unemployed or who owe more than their homes are worth.

Also, the agencies can assist homeowners having trouble securing loan modifications because of second liens, as well as promote affordable housing opportunities.

Obama is scheduled to unveil the initiative, which will be funded with money from the TARP bank bailout, at events in Nevada, which has the highest number of underwater homeowners at 65% and the nation's second-highest unemployment rate at 13%.

The president will be joined by Senate Majority Leader Harry Reid, D-Nev., who is facing a tough relection campaign.

The funds will be allocated based on a formula that takes into account home price declines and unemployment. The agencies' programs must be approved by the Treasury Department.

The move is the administration's latest attempt to fix its signature foreclosure-prevention effort, the Home Affordable Modification Program, which has been widely panned for not doing enough.

The year-old initiative, which lowers qualified borrowers' monthly payments to no more than 31% of pre-tax income, has placed more than one million people in trial modifications. But it has given lasting help to only 116,000 homeowners, mainly by lowering their interest rates.

..."

*********
And this article appears on the site and is pertinent as well:

"Fannie to U.S.: We need another $15.3 billion
By Tami Luhby, senior writer February 26, 2010: 6:35 PM ET

NEW YORK (CNNMoney.com) -- Battered by the housing crisis, mortgage finance company Fannie Mae said Friday that it needs another $15.3 billion in bailout money from the federal government.

Fannie Mae (FNM, Fortune 500), which is controlled by the government, reported a fourth-quarter loss of $16.3 billion, including $1.2 billion in dividend payments to the Treasury Department. This is down from $25.2 billion a year earlier and $19.8 billion in the third quarter.

..."

Perhaps you can see where this is going. Is the cost of seeking project certification in Condo associations justifiable?

There are those that say: "Without Question." And those that "Question."

Full post as published by California Condo & HOA Law on February 27, 2010 (boomark / email).