BTW 25 THOUSAND CONDO"S just lost FHA Underwriting

We said~  Hey this is coming and guess what it ain't over because Fannie's deadline is just a week or so away and even if they move the date back as it seems FHA is doing the facts on the ground are that these Condos are broke and until that is fixed none of them are going to get through a winter let alone pay for some stupid recertification that entangles your community with DEADBEAT OWNERS like FHA, FANNIE.

It might not be a bad Idea for communities to not deal with the agencies since it is these same agencies that placed all the dead beat owners in the units that FANNIE FHA and others now own and again don't pay dime of current assessments and they have not done ONE single thing to help any Community in the USA.  

This is not a joke and the folks that are supposed to be your elected leaders have not done one thing either.  Name one hearing that has been called.  These same folks will take up days talking about Super Rich folks getting a tax cut HOWEVER they will not take one moment to talk about the 100 million US homeowners that are without single voice in DC, it would seem, that cares.

WAKE UP and at least one reporter seems to have http://www.washingtonpost.com/wp-dyn/content/article/2010/12/10/AR2010121002088.html

WHAT IN THE HELL IS GOING ON AT FHA.

Additional update: The HUD Mortgagee Letter 2009-46A,eliminates “Spot Loan” approvals for condominiums going into affect on February 1, 2010.  For a more detailed explanation, read this. We believe that this, along with thenew condo “concentration” guidelines (see number ten) will mean that from this point forward, the HUD database will not be the most accurate to guarantee that a unit “is” or “is not” FHA approved.  After concluding our research, we believe that, by far, the most comprehensive and up to date collection on whether a unit is approved by the FHA will be found atFHA Pros. Check back here for updates.  We will be posting them as they become available.  Click to go to site.

Of course clicking on the FHA Pros link takes you to a $4.99 a search website. The HUD database is free and by what reasoning or act of law or agency can their data not be the authority answer on who is or is not in compliance. 

I would like to hear from someone at HUD as to their database is still relevant and if not why. 

Clearly we'll take a look into this and get back to everyone.   

FHA Condo Reserve requirement kicking Condos in the gut

The condominium/homeowners association must have at least 10% of its budgeted income designated in a capital reserve fund for replacement reserves and adequate funds budgeted for the insurance deductible.

FHA reserve requirements as per FHA Mortgagee Letter 2009-46B This law was put in place over a year ago and it was delayed so that some kind of education and outreach from the agency that is required to fulfill this function. As well this would with a massive pr blitz community the need to condo come into compliance with something that was never asked of them before.

 ~why wait, why not have this as part of any plan that would require repair and maintenance of plant and equipment. Why did the regulators hide this from consumers -- this is a whole blog itself.

I'll go out on a limb and say most don't know that every condo that is backed by FHA loans are required to established a reserve fund.  Thats right and if you didn't get a reserve plan at closing that is a pretty good sign that your condo doesn't have one.

To be in compliance with this a base funding is set at 10% of your budget to be placed in a reserve account. 

So what will happen if your Condo did not set up the fund and didn't get it to the 10% level. Anyone that seeks to refinance or sell a property in said Condo --the loan will be rejected.  Yep, no FHA loans for anyone in your Condo.

Of course there is no official plan in plan by anyone anywhere to deal with this and the FANNIE Recertification requirement that comes up end of DEC as well.

Again, from Washington nothing.

We do have a plan and we'll need to get the help of everyone or we are going to wreak the entire US Economy.

Think CONDOICEBURG.


Here is some more


"Reserve Study – a current reserve study must be performed to assure that adequate funds are available for the funding of capital expenditures and maintenance. A current reserve study must be no more than 12 months old – if recent events or market conditions have affected the finished condition of the property that information must be included. When reviewing the reserve study, consideration must be given to items that have been replaced after the time that the reserve study was completed."

For existing associations with pre-owned condominiums, HUD underwriters require a current reserve study containing a funding projection which clearly indicates the percent funded level is 60% **or more at the time of approval. Once a particular association is approved for FHA lending guarantees there is no requirement that they re-qualify at a future date. However, that does not mean once you are approved by HUD you can forget about your reserve funding program. Even after an association has received HUD approval for FHA loans subsequent loan applications must include an updated reserve study as part of the document package submitted to underwriters. If the underwriters see evidence the reserves are not being funded as planned, or the percent funding amount has fallen to unacceptable levels, it could trigger the need for a new reserve study.
Not only must the reserve study provide a funding plan which indicates the reserves are 60% funded at the time approval is granted, but the association’s reserve account must be current in terms of the contributions which are required to maintain the funding levels indicated in the reserve study. Reserve contributions which are scheduled in the reserve study must be made on a monthly basis.
New condominium developments are treated somewhat differently than existing and converted condominium associations. New developments are said to be those which are newly constructed and are being sold by the developer to the first owner who will ever occupy the dwelling.
New developments are not required to maintain a specific percent funded level in their reserve account. What is required in order to gain approval for FHA loan guarantees is a current approved operating budget which includes a provision for a reserve transfer. The transfer must be adequate relative to the size of the association, its reserve funding obligations, etc.
While this may seem somewhat ambiguous what is important to understand is that the underwriters are looking at the budget and the reserve funding obligations of the association to develop a sense of whether there is a prudent plan for long range replacement funding in place.

http://www.paccrestreserves.com/FHA-HUD-condominium-Reserves.htm

If this is what they are sayin add to it what we have said..

Fannie Mae, Freddie Mac Bailout Likely to Double, FHFA Scenarios Show

By Kevin Depew  October 21, 2010 10:18 AM OUR FORECLOSED WORLD

The Federal Housing Finance Agency (FHFA) today released projections of the financial performance of Fannie Mae and Freddie Mac. The scenarios aren't pretty. 

The really scaring thing is that these projection don't take into account the effect of Fannie Mae on whole condominiums and home/townhouse association bottom line.

What about the recertification requirement for every condo in the USA.  What happens to them and Fannie with they fail to be recertified.

http://www.minyanville.com/dailyfeed/fannie-mae-freddie-mac-bailout/


Note still no talk about a CIC Bailout.

What percentage of Condos need to fail Fannie Recertification before it fails?

If you think about the very premise that Fannie Mae requires that loans in common interest communities (especially condominiums) be backed up with various data points ( ie the parts of the recertification process) and that this recertification process will revel that at least ____% of them will fail.

What is that % number (20 -60) when reached shows that loans that Fannie Mae itself owns  are not eligible for Fannie Mae underwriting.    Do you get what we are saying.   The biggest mortgage note holder notes are not going to be going forward backed by them they have worthless paper in their own underwriting process.

How can they resell these units or anyone else for that matter?

Citizens Property Insurance rate hikes approved in Florida

Citizens Property Insurance rate hikes approved in Florida

Most condominium associations will pay 11% more on average for insurance next year,  Just add this to the length of the condotrainwreak 

Condominiums must re-certify with Fannie Mae by December ~TrainWreak....

Do you really think we could make this stuff up...........Only in Government can it get this stupid  While your reading these requirement consider that every Condominium in the USA has to do this (((((((((((We are not kidding))))))

Now while your reading also realize that in just about every case where a Fannie Mae loan has gone bad there has not been assessment payments sometime in years.

Talk about unfunded mandates just these kill the communities that your homes are part of, again, not kidding. 

So if the community is dead broke, some with lost corporate charters we estimate that over 50 percent of the Condominiums well not be able to be re certified. At what point in time does that actually register with anyone other then this and a few other blogs.


RECERTIFICATION PROCESSING REQUIREMENTS 


1) Determine date project was initially approved (can either check in FHA Connection or on the public web site located at: https://entp.hud.gov/idapp/html/condlook.cfm

2) If project initially approved prior to January 1, 2000, full project approval is required.

3) If project initially approved on or after January 1, 2000, then the project is eligible for the streamlined recertification process.

4) Projects may be recertified beginning six (6) months prior to the approval expiration date or within six (6) months after the approval expiration date.

5) Projects not recertified within six (6) months after the approval expiration date will require full project approval.

6) No new FHA case numbers will be assigned for those projects where the project approval has expired and the project has not been recertified or reapproved.

7) Recertification packages may be submitted by the Lender, Builder/Developer, Homeowners Association, Management Company or an Attorney or Project Consultant who submits on behalf of one of the other named parties. Packages may not be submitted by Borrowers, Sellers and/or Real Estate Agents.

8) Recertification packages may be submitted to the jurisdictional Homeownership Center and processed under the HRAP option DELRAP participating lenders may review and process recertification packages.

9) All documentation and information required on the Condominium Recertification Cover Letter/Document and Checklist must be included in the request for recertification review. Lenders may elect to use their own form; however, it must contain all information required on the examples provided.

10) DELRAP participating lenders must upload all required recertification documentation, including all recorded legal documents, in FHA Connection (FHAC).

11) Regardless of the processing option selected, HRAP or DELRAP, the reviewer must enter the final determination and associated data into the Condominium Maintenance screen in FHAC.


The ICA will be blogging about how to deal with this and offer help to Condominiums get through the process.

Hello Washington DC please stop killing communities.