Most of the new guidelines set forth in the new Condominium Project Approval and Processing Guide became effective June 30, 2011, including new exceptions to the 15% cap on homeowners assessments over 30 days past due.

Prior to issuance of the Guide, any community which had more than 15% of the total units in the community carrying delinquencies over 30 days was not eligible for FHA certification.  Effective June 30, 2011, communities are permitted to request an exception to the 15% cap, for up to 20%.  However, the new guidelines require ALL units to be included in delinquency calculations, including foreclosed and bank owned units.  Under the new guidelines, FHA can review a community’s documentation and determine that tolerance of the higher 20% is warranted if the following requirements are all met:

  • The HOA provides a report for the past six months that reflects the history of unpaid assessments.
  • The HOA current reserve fund balance and current operating results (documented HOA Balance Sheet and Income/Expense financial statements dated less than 90 days at the time of
  • submission) evidences excess available funds in the amount of the outstanding arrearage.
  • A review of the HOA financial statements and verification of the reserve account balance reveals that the HOA has sufficiently accounted for bad debt and arrearages.
  • A current reserve study that is no greater than 24 months old supports the sufficiency of the current HOA assessments to meet the project component replacement needs.
  • The HOA provides evidence of actions to collect the unpaid arrearages, including legal action, execution of payment plans, or other similar efforts.

If you were holding off on seeking FHA approval or re-certification because of delinquencies over 15%, you may now proceed if the above documentation and requirements can be provided and met.  If you have questions regarding the FHA certification process or desire assistance obtaining certification, please contact our office at 303-991-2071.  For more information regarding the new FHA guidelines, read the following article, “Federal rules no boost to condominium industry” and visit CAI’s Mortgage Matters page.

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