FHA albatross of a townhome condo transaction is almost over!
Many of you have read various posts from me over the past few months regarding FHA and the nightmares that it has been causing when trying to sell condos or townhomes with HOA’s. Well, my longest lasting closing is just about to finish this Friday. Tonight, I was able to give the happy news to my client that we got the final sign off on FHA approval to insure the loan on this property sale.
When the newer FHA rules came in to play we got caught up in the middle of it all in November when we learned that the reserve study the HOA had in hand hadn’t been approved by the board yet and FHA now would not accept spot approvals for anything with a reserve study outside of 12 months. Because of this, we thought it was a dead deal and the contract was rescinded in early December. Then it was like Phoenix Rising as in late December we heard that a lender was willing to consider the loan by using the budget review of the HOA as the determining factor. Ok, we said! So, back into contract we went.
Then December moved slowly on by and our goal of a January 6th closing extended further into January, with our extension for closing pushed to mid-January. Mid-January came and went and the next thing we knew it was pushed to late January.
Now, during part of this time I began to learn that the buyer was also dragging his feet. It became a catch-22 as the buyer wouldn’t follow up with loan conditions as he waited for FHA to move first with their approval. This caused unnecessary delays as having the closing loan conditions cleared would have helped with moving the loan into the hands of FHA earlier.
One of the many beneficial things we did on the seller side of things (I am the listing agent in this scenario) was for me to contact other listing agents in the same complex to build support for homeowners to apply pressure to their board to accept the reserve study - even if it was with conditions for review of certain elements. This along with another agent working with yet another lender to submit a full FHA approval packet for the development (only 1 out of 5 divisions had originally held FHA approval) which was approved within a day of our spot approval. Our client had at least passed an FHA appraisal in November and I believe that helped us as well since it would have been recorded against the property in the FHA database, plus at least 3 other homes had sold via FHA loans in the 6 months prior to all these changes.
So, our last extension put us to a Friday closing of this week. My fellow agents and our friend/clients out there, please cross your fingers for us and knock on wood that this is it!!!!
