This recent story below points out how important FHA financing is in today’s market and that the efforts of associations can improve or damage the saleability of their homes depending on how they are run. FHA blanket association approval is only needed for condominium projects – townhome developments can be financed with FHA without the special association approval.
One thing to note is that some townhomes are considered condos as well – you need to look at the legal description of the property to discover whether the property is classified as a condo or townhome. If it says “Lot x Block x……” you are ok. If the property has Condo or CIC in the legal description it most likely falls under the rules requiring FHA approval of the association.
Associations Can No Longer Ignore FHA Approval
RISMEDIA, July 16, 2010—The screaming and cursing you hear in unit 404 isn’t coming from Mr. Armbrister’s television—Armbrister has just learned that another potential sale of his condominium unit fell through due to the buyer’s inability to obtain financing. In this case, the buyer wanted to purchase Armbrister’s condo unit with an FHA loan—Armbrister’s homeowners association, however, had neglected to obtain FHA approval.
[...] encountered more and more condominium projects that have lost their FHA project approval and have written on the issue before. What does it mean when a project loses approval? Buyers in those developments will not be able [...]