FHA certification in your condominium or homeowner association brings one very important benefit for the owners — it improves marketability of the property because it can appeal to a wider buying audience, especially for first-time homebuyers. This is especially important if a potential buyer has pre-qualified for an FHA loan. However, if your HOA is looking into FHA certification or attempting to recertify, you’ll find that it’s challenging and time-consuming to do.

 

There’s a mountain of paperwork involved in getting your association FHA certified. In many cases, certification can mean hiring an outside consultant for a few thousand dollars. Or, at the very least, it ties up a significant amount of time for an HOA Board member.  Add this to the certification cost plus meeting constantly changing FHA recertification requirements, and you begin to understand why HOAs postpone or forego FHA certification.

 

Before jumping into pursuing certification, most HOA Boards evaluate if the association needs this. If homes in the community have enough marketability without FHA loans, many HOAs have chosen not to pursue certification. However, failure to pursue the certification can create a new set of problems.

 

The Department of Justice may get involved and/or file lawsuits when there’s reason to believe an HOA has discriminated against a group of people.  Such was the case recently when the Ohio Civil Rights Commission filed a discrimination suit against an association for not obtaining FHA certification. In this situation, a single mother with a child was denied an FHA loan because the property was not FHA certified. The community had previously decided not to recertify, thus the loan failed and the Civil Rights Commission filed suit.

 

While this case is still underway, it seems that not pursuing recertification resulted in potential discrimination due to the child. Based on the outcome of this case, it could mean that HOAs would have to seek FHA certification regardless of the cost or benefit to the community. The result could affect moderate-income buyers, homeowner associations and sellers.  For now, the condo and homeowner association industry waits to see how it plays out in the courts. 

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