This new ruling has sent many homeowner association management companys for a tail spin as they frantically attempt to learn how the change will affect their associations. Stepping through the process of gaining HUD’s approval takes time and each condo complex must reach a specific level of financial reserves to qualify. For complexes that are low on reserve funds, they may not be able to achieve approval status for some time. In addition, complexes will be required to become recertified each year. This is sure to put an additional strain on condo complexes that are struggling already with foreclosures, delinquent home owners, and builder defect issues.
The goal behind the idea is noble, but somewhat idealistic: to protect buyers from purchasing in a condo complex that may be at risk with an association that has been financially mis-managed. In addition, it will help protect lenders from financing in struggling complexes that will add to the current banking problems. However, the HUD transition, is going to cause many condo owners to either be unable to refinance or sell, setting the scene for additional foreclosures.
If you are currently an owner in a condo complex, contact your management company and association to ensure that they are taking the necessary steps to become or maintain HUD certification. Don’t wait until selling or refinancing your home to learn your association is not familiar with these changes.
