It usually pays off for sellers to have property FHA approved

Q: I have been trying unsuccessfully for 17 months to get a reverse mortgage on my condominium. This loan has not gone through because my association has lost its Federal Housing Adminstration approval. Our management company has been trying to get us reapproved but seems to be getting nowhere. They are hung up on item 3 of the enclosed U.S. Department of Housing and Urban Development list. Their attorney wants $5,000 to handle this and they refused. I am back to square one. Any help would be appreciated.

A: First, the reader should ask the board to reconsider its position. Almost half of the loans processed in Southern Nevada are FHA loans. The $5,000 payment to the association's attorney would benefit the majority of owners, from those refinancing their homes to those selling their homes. When you are not FHA-approved, you are eliminating many potential buyers who are FHA-qualified.

Second, your association's attorney may be familiar with FHA regulations. It would pay for the management company to contact other attorneys to see if they can complete item 3 for less money. The reader may want to contact some of the title/escrow companies to see if they can assist him and his association.

Third, it would be of interest to see if the association's governing documents require the association to meet the requirements of FHA financing and to be FHA approved. If this is the case, then the reader could pursue this matter with the state ombudsman office as the association would then be in violation of its governing documents.

For readers whose associations have lost FHA financing, the following exhibits are required for HUD review and approval of an existing construction condominium project:

1. Letter of request for approval and a summary of all exhibits submitted.

2. Federal Emergency Management Agency Flood Map (reduced copy) indicating location of property and Special Flood Hazard Areas. If the project is located in a SFHA, the association has to provide evidence that the association carries adequate flood insurance coverage for the entire project.

3. Federal National Mortgage Association 1028 Certification, Veterans Adminstration approval or attorney's (legal) certification (per the guidelines in HUD Handbook 4150.1, Chapter 11 and HUD Handbook 4255.1, Appendix 24). It is this third item that has stopped this association from completing FHA requirements.

4. Location Map.

5. Recorded Plat Map indicating legal description.

6. Current financial information, including balance sheet, income/expense report, current year budget and reserve study or analysis (dated within the last two years).

7. Recorded covenants, conditions and restrictions, association declaration.

8. Signed and adopted bylaws.

9. Proposed management agreement if applicable.

10. Articles of incorporation filed with the state.

11. Minutes of the last two association meetings.

12. Certifications by the direct endorsement underwriter that at least 51 percent of the units in the complex are owner-occupied. The last item, No. 13, is for rental conversions only (apartments to associations) -- Approved HUD form 935.2 (2004), affirmative fair housing marketing plan or approved signatory to a voluntary affirmative marketing agreement and/or Bureau of Indian Affairs acceptance letter of good standing.

As you can see, with the exception of items 3 and 13 (for those apartment conversions to associations), it would not take that long for an association to acquire the listed items.

Associations that have lost FHA financing would serve their members by getting reinstated by FHA.

Correction: In my Dec. 30, 2007 column, I inadvertently misstated some numbers when giving a hypothetical example of how many votes would be needed to recall an association board member.

NRS 116.31036 addresses the matter in two parts, stating that a recall vote must have at least 35 percent of all members voting for the recall, while also saying that a majority of those casting votes must vote in favor of removal from office for the motion to carry.

As an example, if an association of 68 homeowners held a recall vote and 49 votes were cast -- with 25 voting for removal and 24 voting against removal -- the director would be removed from office.

The 25 votes for removal would be a majority of the votes cast, while also representing more than 35 percent of all association members.

Barbara Holland, certified property manager, is president and owner of H&L Realty and Management Co. Questions may be sent to Association Q. & A., P.O. Box 7440, Las Vegas, NV 89125. Her fax number is 385-3759. Questions may be shortened and are subject to editing.