In 2010 condo associations around the country learned that their FHA Certification would be expiring in waves beginning in December of that year. A flood of applications to extend certifications subsequently poured into HUD offices around the country, but those new certifications were only valid for two years. Recertification is necessary to keep an association on the FHA approved list.
Associations should calendar their FHA expiration dates and contact their attorney about six months prior to expiration. Recertification can be obtained up to six months before a current FHA certification expires; so calendaring this date can help an association avoid any lapses in certification.
The recertification process is very similar to the process for obtaining an association’s initial FHA certification, and the key factors affecting approval all involve the financial health of the community. Keeping delinquencies under 15% and allotting at least 10% of the annual budget toward reserves are two important factors. For associations in transition, serious construction defects can also prevent certification, as these defects represent potential financial hardship in the future and threaten the value of a lender’s collateral.