Archive for the ‘Owner Financing’ Category

FHA eases burdensome condo financing rules

Monday, September 24th, 2012

By Kenneth R. Harney

September 23, 2012

FHA Update

WASHINGTON ― Here’s some encouraging news for condominium unit owners, sellers and buyers: The biggest source of funding for low-down-payment condo mortgages, the Federal Housing Administration, has revamped controversial rules that caused thousands of buildings across the country to lose their eligibility for FHA financing.

The revised guidelines, which were issued Sept. 13 and took effect immediately, should make it easier for large numbers of homeowner associations to seek certification by the FHA. The certification process is intended to provide the FHA, a government-run mortgage insurance agency, with key information about a development’s legal, physical and financial status. Without approval of an entire development ― regardless of whether it’s a small complex in the suburbs or a massive high-rise in the center city ― no individual unit can be financed or refinanced with an FHA mortgage.

One of the most significant changes the FHA made involves personal legal liability for condo association boards and officers. The previous rules required officers to attest that they had “no knowledge of circumstances or conditions that might have an adverse effect on the project or cause a mortgage secured by a unit” to become delinquent, of “dissatisfaction among unit owners about the operation of the project or owners association” or of “disputes concerning unit owners.” The penalty for officers who “knowingly” and “willfully” submitted information to the FHA that was found to be false: fines of up to $1 million and 30 years in prison.

Although the previous rules focused on entire buildings, individual unit owners seeking to sell often have taken the brunt. The Community Associations Institute, the condo industry’s largest trade group, welcomed the relaxation of the FHA rules, predicting that “this will spark home sales and help tens of thousands of condominium communities begin to recover from the housing slump.”

Not surprisingly, many board officers declined to take on what they interpreted as lifetime legal responsibility for such details as whether the condominium fully complied with state and local environmental and real estate requirements. Although the FHA insisted that the associations were overreacting, the new certifications contain much less scary language. The penalties for intentional frauds against the government remain the same, however.

Among other key rule changes:

  • Greater flexibility on investor ownership. In existing developments, one or more investors are now allowed to own up to 50% of the total units provided that at least half of the units are owner-occupied. The previous rule required that no more than 10% of units could be owned by a single investor.
  • The previous treatment of unpaid condo association dues was raised to 60 days from 30 days. Under the revised rule, condo communities where no more than 15% of unit owners are 60 days late on payment of dues can be approved for FHA loans.
  • Clarification of certain insurance requirements that many communities found burdensome.
  • Source: L.A. Times

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    Cell: 805-448-8882

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    Santa Barbara Listings Offering Owner Financing To Buyers. – Part I

    Thursday, October 7th, 2010

    ‘Seller Financing’, ‘Seller Carry Back’, ‘Owner Will Carry’, ‘Taking Back the Note’ are all descriptions of the ever growing home financing opportunities across the country, in California, and now in Santa Barbara. Homeowners rarely contemplate personally financing the sale of their home, however in tight credit markets, owner financing can be a very powerful sales tool. A seller-financed real estate transaction is simply a sale where the owner operates as the ‘bank’ and where the buyer makes their payment directly to the seller.

    Seller Financing - Loan Approved!

    Seller financing offers many advantages to both buyer and seller:

    FOR BUYERS:

    • Easy Qualification. Credit requirements may be a little more flexible.
    • Less Paperwork. More flexibility on the loan documents.
    • No Loan Costs. Substantial savings in closing costs.
    • Seller Flexibility. Owners can be more flexible if buyers get in trouble.

    FOR SELLERS:

    • Pool of Buyers. Properties become more appealing to the growing pool of ‘credit-challenged’ buyers in today’s market.
    • Fast Closing. Owners can move a property more quickly.
    • Highest Price. Typically, when offering flexible owner-finance terms, sellers receiver higher prices. Buyers frequently are willing to pay a premium for non-qualifying financing.
    • Tax Benefit. An installment sale of real estate allows for the deferral of capital gain recognition. Always consult your tax professional regarding the impact of real estate on your tax liability.

    In down markets, those sellers who are able to offer flexible terms to get their real property sold and closed often are at a significant advantage to sell their home quickly. This can potentially result in a larger pool of buyers; more profit; hopefully help the seller avoid chasing a falling market, and ideally lead to a quicker sale.

    Are you looking to buy a home in or near Santa Barbara but have been unable to qualify for conventional bank financing? If you have a reasonable down payment, the ability to make monthly payments, buying a home in Santa Barbara may still be a reality. As more Santa Barbara sellers offer owner financing to attract buyers, the opportunities for you to buy a great property in Santa Barbara may no longer be just a dream.

    If your Santa Barbara home ownership dream has been on hold, consider contacting Sylvia Miller. She can help you buy an owner-financed Santa Barbara home.

    1402 Grand Ave, Santa Barbara, CA - Owner Financing Available!

    The following are two examples of Santa Barbara homes currently offered for sale with owner financing available. See photo at left.

    Property One:
    1402 Grand Ave, Santa Barbara, CA – $2475,000

    Stunning 180 degree views & an exquisite house! Every room is done with Italian stone, custom wooden beams & cabinetry and hand cast faux plaster walls. This classic estate was rebuilt from the ground up in 2002, and is one of the largest properties in the City with over 5 acres, walking trails, & 600 ft tree-lined driveway. Separate guest house 1bed/1bath.

    897 Park Lane West - Owner Financing Available!

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    Property Two:
    897 Park Lane West, Santa Barbara, CA – $3,950,000

    Panoramic ocean, island, Santa Barbara Harbor, & Santa Ynez Mountain views. Quiet, private road access in Montecito’s exclusive Golden Quadrangle. Outstanding custom features, including cathedral ceiling, stone fireplace, wood floors, wine rack wall. Master Suite with sitting area & fireplace. Fiber glass lined solar heated pool, rem control Jacuzzi spa.

    If you would like to see either of these beautiful properties, or others, please contact Sylvia Miller, cell: 805-448-8882, or email her at sylvia@sanbarb.com.

    If you would like more information on other owner-financed properties within Santa Barbara, Montecito, Carpinteria and Summerland, Goleta, Hope Ranch, and the Santa Ynez Valley, please contact me, sylvia@sanbarb.com, cell: 805-448-8882.

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