This is a column by local real estate agents Walt Fitzgerald and Ali Ludwig.
In February 2010, the Federal Housing Administration (FHA) came up with a new set of lending guidelines, drastically changing how condominium units are approved for FHA backed loans. That was long enough ago, that you would think there would not be a continued negative impact. So what's the deal?
Many people do not realize that the condos up for sale are still not FHA approved. Until February 2010, a lender could get an approval for a condo unit through a "spot approval,” if the unit was on the FHA's list of previously approved properties.
After February 2010, the spot approval process was removed. Now the entire complex needs to get approved under the new guidelines and these approvals expired every two years. If you are a seller and your complex is not approved, you are really not in the game when it comes to selling because many, many buyers are using the attractive FHA programs offered by their lenders.
Without an approval, these properties will not be eligible for this type of financing. Ultimately, this can bring the value of the property down, because even if you have a great buyer, you are limiting the ways that the property can be purchased. In these situations, it is the unqualified buildings that are killing the deals on condo purchases, not unqualified buyers.
Here are 5 Chelmsford complexes with approvals, according to the FHA website:
1. Williamsburg I, approved through August 2012.
2. Williamsburg II, approved through July 2012.
3. Scotty Hollow, approved through October 2013.
4. Adams Farm, approved through March 2012.
5. Courtyard, approved through August 2013.
And 5 Chelmsford Complexes without approval. They have all expired:
1. Chelmsford Village
3. Olde Middlesex Estates
You can find whether a complex is approved by visiting hud.gov and filling in the search criteria on their condo approval page.
Chelmsford currently has 39 active listings for condominiums and has sold 111 units in 2011. These numbers really bring home why it is important to make sure not to limit the buyer pool’s choice of complexes. In this market, if well qualified buyers can’t buy an unqualified unit, many will just move on to another complex that qualifies!
Buyers who are willing to wait the length of time it takes to go through the approval process when putting an offer in on a complex that is not FHA approved should make sure that the lender they are using is extremely familiar and comfortable with the approval process. Using an experienced lender will make not only save time, but should make everything run a little more smoothly. If everyone cooperates with the process, a response should be had within a 30 day timeframe.