In general, condominiums are popular among first time homebuyers. In addition, FHA mortgages are a popular financing option for first time homebuyers because of the low down payment (3.5%). However, if a buyer is purchasing a condominium and is obtaining an FHA-insured Mortgage, the condominium complex must be on a list of HUD approved complexes and meet certain criteria.
Prior to December 7, 2009, once a condominium complex received HUD approval, it remained on HUD’s list of approved condominium complexes. However, for each FHA loan, lenders would ask condominium associations to complete a questionnaire to confirm that the complex continued to meet FHA guidelines.
As of December 7, 2009, condominium complexes have to be re-approved by HUD every two years to stay on the list of HUD approved complexes.
Condominium complexes approved by HUD before October 1, 2008 had until December 7, 2010 to obtain their HUD recertification so that they could stay on the HUD list of approved condominium complexes. Condominium complexes approved by HUD on or after October 1, 2008, in general, had/have to be recertified by HUD 24 months after the date of their HUD approval.
Many condominium associations were unaware of this important change so HUD extended the December 7, 2010 deadline to either May 31 or July 31, 2011. Unfortunately, despite this extension, HUD approval for many condominium complexes in the Greater Hartford area have expired.
As the chart below illustrates:
- Only 11.02% of the condominium complexes in these the Greater Hartford area are currently on the HUD list of approved condominium complexes.
- Another 7.62% of the condominium complexes in the Greater Hartford area may lose their HUD certification if they are not re-approved prior to 12/31/2011 (actual expiration dates vary by complex).
- The HUD approval status has expired for 77.15% of the condominium complexes in the Greater Hartford area.
- And, 4.21% of the condominium complexes have had their FHA applications rejected by HUD for reasons ranging from incomplete applications to environmental issues to high rate of existing unit owners with FHA mortgages.
|Town||#HUD Approved Complexes Expiring >2011||# HUD Approved Complexes Expiring <2012||# HUD Complexes W/Expired HUD Certification||# Complexes w/Denied HUD Certifications|
|Total Greater Hartford||55||38||385||21|
In summary, over 80% of the former HUD approved Greater Hartford Area condominium complexes are currently not eligible for FHA financing. This is resulting in an increase in the average days on market for condominiums, creating downward pressure on condominium sales prices, and turning some condo owners into landlords.
If you would like to know whether a condominium complex is on the list of HUD approved condominium complexes, go to https://entp.hud.gov/idapp/html/condlook.cfm, select CT in the state field, and enter the name of the town in which the complex is located in the town field.
If you are a condominium owner and HUD approval of the condominium complex in which your unit is located has expired or is expiring in 2011, contact the association president or management company for your complex to find out the status of the HUD recertification for your complex.