Condo Owners: Do you incur additional risk to admit a new co-owner to your Assn. with FHA financing?
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It is illegal to make acceptions for certain units, unless you are going to accept FHA financing across the board.
In my market. when properties are over $150K , it is very common for sellers to state that they will not entertain FHA/VA financing, and they are well within their rights to do so. That is to ensure more qualified buyers come to the table.
You are correct that FHA/VA buyers are marginal buyers, and if that doesn't go with the flow of your CA, then that is a legal way to remedy the situation.
However, you are incorrect on one aspect...FHA DOES NOT step in and make the payments in the event of a default...the MIP that insures the FHA loan is for the lender..not the buyer..so the same foreclosure process would apply.
It is also not fair to the rest of the homeowners, that thought they were purchasing into a CA that had those restrictions, if they are later waived.
That would be detrimental to overall property values. I have seen HOA's and CA's, when the standards start to be lowered by the powers that be, then that can send a panic across the residence and people will start selling to get out.
One of the first houses I bought for myself, the neighorhood started going down quickly in year 3...I sold that same year...that was 14 years ago...in that same neighborhood, I could buy that same house for $10K LESS than I paid for it 14 years ago.
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