As tough as it is for new buyers to obtain financing today, some condo owners are facing difficulties even applying for FHA loans and FHA-insured reverse mortgages because of association board members denying their requests for FHA approval.
This recently happened in Chicago to an 80-year-old woman who lives in the Gold Coast neighborhood, according to ReverseMortgageDaily.com. She owns her condo, valued at $800,000, and wanted to adjust her loan. However, the board voted against obtaining FHA approval.
The Los Angeles Times are reporting that this is negligence on the association boards’ part. By denying the request to apply to become FHA-approved, these board members are withholding rights that property owners have.
“As authorized with the passage of the Housing and Economic Recovery Act of 2008 (HERA), the Federal Housing Administration (FHA) implemented an approval process for condominium projects and insurance requirements for mortgages on individual units, under Section 203(b) of the National Housing Act,” states the FHA website.
By denying requests for FHA approvals, board members may be opening the doors to lawsuits if condo owners cannot obtain a reverse mortgage or FHA loan and, in turn, lose their property. If a condo owner misses the deadline for a loan, this may result in the board being held responsible for any fees that ensue. On top of that, they may also be facing charges of negligence and discrimination.
The LA Times also reported that no board director has the unilateral authority to control the assets of others, to decide what families can and cannot purchase in a development, and what mortgages are acceptable. Yet, that doesn’t seem to be stopping some association boards.