From RealTrends.com: For young first-time buyers, people with modest down-payment cash or seniors who want to tap their equity using a reverse mortgage, it is a growing problem: They cannot use Federal Housing Administration financing in condominiums.It’s not that these buyers and unit owners can’t qualify on credit and income grounds for a loan personally — they often can. Instead, it’s because the entire condominium development is ineligible. As the result of policy changes at the federal level and decisions by condominium boards of directors, thousands of communities have essentially become prohibited lending zones for the FHA in the last several years. The agency has banned so-called spot loans and will insure mortgages only on units in condo projects that have passed a certification process that examines budgets, reserves, insurance coverage, percentage of renters in the development, and delinquencies on payment of condo fees.
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