As we all know from our recent blogs as well as media stories in the past month new condominium projects in Colorado are at a pivotal point. Economic development goals are pushing for more condominiums to be built, especially in urban, mass-transit focused areas. Stable, vibrant condominium associations need well-built, good quality condominiums. Thus, some may say this has produced a conundrum for us…can we have both? Do we need legislation to ensure both? Maybe, but there is a more pressing conundrum in our condominium market according to Kenneth Harney of the Washington Post Writers Group. In his story, picked up by several national newspapers, he discusses the financing conundrum.
The FHA has been the go-to source for mortgages for many first time buyers including buyers of condominiums. But currently, the FHA is only insuring mortgages in about 7% of the country’s estimated 150,000-plus condominiums according to Mr. Harney. Why this decline in FHA insurance of condominium mortgages? This all stems from the 2010 change in process where spot approvals were no longer granted and instead condominium associations were required to be certified every two years. And, more importantly, stringent guidelines were imposed on certification. For more information on these guidelines see our article on FHA Certification.
While the need for new condominium construction may be pressing, the need for financing for existing condominiums is hitting our market every day. In Colorado only about 475 condominium communities are approved for FHA financing. If more condominium communities were approved then perhaps there would not be the need for legislation deterring litigation of shoddily built ones? If your community is approved it is likely you’ll be able to take advantage of the ever growing demand for condominiums in the Denver market! We have helped over 150 condominium communities get certified since 2010 and are happy to explain what is needed, how the process works and complete all the paperwork for you. Contact Elina Gilbert or Jennifer Keenan if you have any questions.