Monthly Archives: December 2013

FHA certification

An unwelcome surprise has visited many common interest communities in the past few years: their FHA mortgage approval certification has lapsed.

Once upon a time pretty much every CIC was approved for FHA financing. FHA is often preferred to Conventional mortgage in that the qualifying ratios are more generous and the down payment requirement is substantially lower. This allows more people to qualify for a home mortgage.

However, in the wake of the bursting of the real estate bubble around 2007, the FHA revamped its requirements for CICs , creating more onerous burdens if they wanted to be certified for FHA financing. FHA also took away “spot approval” in which individual units could be FHA approved without the entire association being certified.

This has created some tension between individual homeowners and their associations, as it can pit the needs and wants of the one against those of the community. As management, I honestly could argue either way on this.

The PROS: FHA financing allows for a larger pool of qualified buyers. This can help maintain or improve housing value and even prevent units from going into foreclosure if a seller needs all the buyers s/he can find. FHA mortgagors are often first-time buyers and owner-occupants.

The CONS: The new requirements create a burden to the association in terms of dollars and time (i.e. re-certification must now be done bi-annually and usually someone must be paid to oversee this). FHA financing allows buyers without much scratch to buy into the community. Are they a job loss or illness away from foreclosure?

Every association is different and I have found no “right” way to proceed—even with regard to discussing the topic at all. Some associations yawn as this is no concern for them while others have homeowners up in arms as it’s claimed the association is restricting their ability to sell.

Whenever the topic comes up for discussion, I’ve found it valuable to start with talk of pros and cons. Is this a good thing for the association? It also helps to segue into talk about talk. What is this association’s take on its obligation of communication to homeowners? What are homeowner’s obligations to communicate with the association?

An open dialogue, folks. That is what I preach because it’s best for the community.

Merry Christmas and Happy New Year.

Susan and I send you our best in this holiday season.

Let It Snow…Not!

Having had snow in May, I am especially driven this year to revisit associations’ interactions with their snow clearing vendors. Minnesotans by nature, are a patient lot and understand that any snowfall of significance will slow everything down.

The greatest area for discord lies within the snow clearing contract’s parameters. With most of my associations, I publish the contract parameters every year in November or December. I try to present the executive summary so people actually read it, instead of falling asleep in the midst of the contract language.

Most contracts provide a widely held industry standard time frame for initial, follow up and final clearing. I do want to hear from my homeowners if the vendor is failing to meet these parameters (hence my reason for publishing them). But 80-90% of the time, individual complaints are the result of desiring performance which exceeds the contract’s parameters.

Just like Arlo Guthrie’s “Alice’s Restaurant”, you can get anything you want but you have to pay for it. Very few associations out there could afford the high level of service some homeowners would like. So they have to settle for adequate service at a reasonable price.

This may mean that your driveway will not be plowed whenever you need to enter or exit it. This may mean that you have to do some back-and-forth jiggering of your car to get it around that snow bank at the end of the drivelane—at least until the Board authorizes the additional expense of snow pack removal. This will mean that if your car is parked in your driveway or on the street, the plow will come nowhere near it (and likely neither will the shoveling crew).

Many of my associations pay $1500-$1900 per month for a snow contract. Commercial properties, whose snow is cleared to far more exacting specifications, usually pay multiple times as much. It’s always a matter of balancing service against cost. (As a f’rinstance, commercial properties may start snow clearing at 1/10th of an inch. Most common interest communities start at 1 ½ inches.)

So please let me know if they missed your driveway. Mistakes will be made, snafus will happen. Meantime, please also give yourself extra time or consider postponing going out when weather conditions are ornery.