FHA Approval of Condominium Projects – It’s a Process, not a Form
We have found that managers and board members who have not had any experience with the process of obtaining FHA project approval have unrealistic expectations about the processing time. In this edition we let you know the “ins and outs” of the application for such approval. We handle both initial applications and recertifications and there is a significant difference.
If your association is applying for the first time for FHA certification the association will require a full review of its condominium documents to make sure they will comply with the changes FHA made to their document requirements in 2011. So even relatively new documents must be reviewed by the preparer. If the documents do not comply then it will require going through the amendment process. We would then have to complete the FHA application and the required exhibits after certain amendments are passed, documented and recorded. The exhibits include such items as your governing documents, budget, financial statements and insurance policies. We check them closely for compliance with requirements regarding delinquency rates, amount of reserves, owner occupancy and insurance requirements.
Once the application package is submitted to FHA, it will take approximately 30 days to receive a response. As you can see, this is not a one or two week process and if everything goes smoothly (the documents all comply and FHA accepts the application on the first go-around), it will be a minimum of 60 days from the time you ask us to proceed before the association will have FHA certification. That’s why it’s best for associations to get FHA certification before there is a contract pending which finally gives the board the impetus to move forward on obtaining the approval.
Should you have questions about this or any community association issue please do not hesitate to give us a call or send us an email.