FHA Condominium Seminar

Should Your Condominium Obtain FHA Approval?

July 13, 2011
National Condo Advisors’ CEO, Orest Tomaselli, will be part of a panel of industry experts reviewing recent FHA changes and its implications for the industry.
Join us as we discuss new issues, challenges and opportunities regarding the FHA guideline changes.

Hosts: MARCUS, ERRICO, EMMER & BROOKS, P.C.
Date: Wednesday, July 27, 2011
Registration: 8:30 AM
Time: 9:00 AM – 12:30 PM
Location: Tavern at Quarry Hills & Granite Links Golf Club – Ross Ballroom, 100 Quarry Hills Drive, Quincy, MA
~ Continental Breakfast Being Served ~

Highlights to be Discussed Include:

• New requirements for reserve studies for new conversions
• New certification for special assessments
• New delinquency rules
• New requirement for project certification to be signed by manager or association
• Effective date for some changes is immediate
• Expanded financial records now required
• Fidelity insurance changes
• FHA position regarding association loans and special assessments

Register today!

Contact Carol Lang at clang@meeb.com or 781-843-5000 (ex. 119.) Unable to attend? Sign up for the live webinar (a $100 fee.)

1. Reserve Study Requirements
New guidelines require reserve studies on all conversion developments. Reserve studies are valid for a period of 2 years.

2. Reserve Study Funding
In addition to a reserve study determination, a minimum of 10% of the operating budget must be set aside as a baseline in a reserve account.

Funds to cover the total cost of any item in the Reserve Study or that will require replacement within 5 years must be deposited in HOA’s reserve account.

The insurance deductible must also be included in the reserve fund.

3. New Construction Pre-Sale
New Construction pre-sale requirements remain at 30%, although only for one year after the first closing. After the first year, it increases to 50% for the development.

4. Conversion Pre-Sale
Pre-sale requirement for converted condominium developments will be 51%. Owner occupancy must be at least 51% as well.

5. Conversion Processing
Direct to HUD only. Must be processed through HRAP.

6. Maximum Commercial Concentration
Remains at 25%, however, new guidance allows for possible waiver request up to 35% of the development.

7. 10% Investor Concentration
No longer includes sponsor unsold units or units required to be rented by State or Municipality, ie; rent stabilized/rent controlled.

8. Rent Stabilized/Rent Controlled Units
No longer subject to investor requirements.

9. Manufactured Housing
Now HUD insurable based upon an HRAP project approval.

10. Lender DELRAP Compliance
Severe compliance and review measures updated for lender-submitted FHA DELRAP applications.]

How does this affect your business? Questions about the new guidelines? National Condo will be holding a webinar on Wednesday, July 6th at 1PM EST. Join us as we review the new policies and answer your questions regarding compliance. Click here to register.

National Condo Inspections is proud to announce that clients may now request our No Cost Feasibility Analysis by downloading the PDF questionnaire directly from our blog and website. This review will provide a predictive range based upon our company’s experience with similar projects as to how much a Reserve Study would recommend in funding for the first year, and will include a full proposal for project approval submission. This allows you to determine whether a Reserve Study will reduce your condominium’s 10% reserve requirement, ensure that your condo is currently carrying sufficient reserves for a healthy development, and provide you with a cost and scope of work for an FHA and Fannie Mae compliant Reserve Study

If you have any questions, please call our office at 888-726-6361.

DOWNLOAD NO COST FEASIBILITY ANALYSIS FORM as PDF by clicking here

Orest Tomaselli was recently interviewed for a Courier Post article entitled, “New FHA regulations stall many recent condo sales,” which discusses the new difficulties and importance of obtaining FHA project approval for condominium developments:

Announced in November, the new regulations fall into three broad categories, according to Orest Tomaselli, the president of National Condo Advisors, a consulting company that works with condominium associations to help them meet the regulations.

First, he said, the community must demonstrate it has a budget reserve that is equal to 10 percent of its annual budget. The reserve exists for repairs and maintenance of the common property and plant – the sidewalks, roofing, siding, windows, swimming pool, tennis courts, clubhouse or other facilities. If a community does not have or want such a large reserve, Tomaselli said it can hire an engineer to study the community’s needs and recommend a lower amount. If the FHA accepts the engineer’s study, a lower reserve amount can be set for that community.

Second, the condominium community must meet new flood-plain requirements set forth by the Federal Emergency Management Agency. If the community is not in a flood plain, this is not an issue. However, when FEMA redrew its flood maps recently,
it expanded the areas it believes will flood. Within those areas, buildings can still comply if the community has flood insurance and the highest living space is 10 feet or more above the flood plain. Or, the community can hire an engineer to file a “Letter of Loan Amendment,’ which, in effect, demonstrates that the FEMA guidance needs adjusting in their case. If FHA accepts this amendment, the community can be certified.

Third, the community must meet certain ownership requirements. At least half of all the units in the community must be owner-occupied, and no one investor can own more than 10 percent of all the units. In the case of a community that is still
being built, a certain percentage of units must be presold.

Tomaselli said that the requirements aren’t really bad. Having sufficient capital reserves to meet maintenance needs is wise. Having most of the units occupied by the owners also ensures that the community will be well looked after. And
flooding in some areas has been more frequent in recent years.

Tomaselli recommends that every condominium community become certified for the economic health of the development. Compliance ensures that every individual owner within the community has the best chance of selling their unit.

To view the entire article on the web, please follow this LINK

Download a PDF of the Courier Post’s article here