Selling a condominium in this troubled market hardly needed to get any more difficult.
But that's exactly what could happen to scores of Tampa Bay area condo owners looking to sell or refinance with Federal Housing Administration mortgages.
The FHA — which insures mortgage loans, among other things — has new eligibility rules that condo buildings must follow before any individual unit owners can sell or refinance.
Locally, more than a dozen Tampa Bay condominium complexes had December deadlines to file for the certifications, including St. Petersburg's Palma Del Mar, Sun Ketch and Sky Harbor, and Tampa's Raintree Manor, Place One and Cedar Woods buildings. It will take months for the FHA to process all the paperwork to determine whether the buildings meet the new requirements.
They could become part of the 23,000 projects across the United States, with residential units estimated in the hundreds of thousands, that could also lose the eligibility. A staggered series of deadlines stretches into early this year to gain certifications. The deadlines are based on when the buildings were built.
Florida, along with California, New England and the Midwest, has some of the highest clusters of condos in the country. The FHA wants current information on homeowners associations' budgets, legal documents, insurance coverage, renter-to-owner ratios and delinquencies on condo fee payments.
A review competed in 2009 found that the FHA had approved thousands of projects in the past two decades, but it lacked information to confirm that a building or project was on sound financial footing.
Brian Sullivan, a spokesman for the U.S. Department of Housing and Urban Development, said the recertifications are crucial with so many distressed condominiums.
"This goes to risk in today's marketplace," Sullivan said. "It's important for a place like Florida that is so condo heavy."
Experts say condo sellers nationwide could suddenly be cut off from an increasingly important source of mortgage money; in some markets, the FHA accounts for 75 percent or more of first-time home purchases.
Wells Fargo, the nation's leading FHA lender, is working with scores of condo developers and owners to make sure buildings become certified, said spokesman Tom Goyda. The certifications are important, but he cautioned that it's too early to determine the effect of the approaching deadlines, adding: "It's a complex issue."
But one mortgage broker in Clearwater doesn't think FHA certifications will greatly impact Florida. Many lenders already refuse to loan money on condos, said Scott Chinchar, owner of Scott Mortgage .
"It's already been a problem," he said. "The damage has already been done."
The National Association of Realtors has urged the FHA to loosen some of the certification criteria so first-time buyers aren't driven away from the condo market.
Brian Shuford, the director of governmental affairs for the Pinellas Realtor Organization, said certifications are meant to protect the buyer and government from bad mortgages.
Financing condos nowadays is difficult even without the FHA requirements, said Nick Fraser, owner of Remax All Star in Madeira Beach. Most condo buyers are either paying cash or have down payments between 20 and 30 percent, he added.
"Unless you're putting down a substantial down payment, it's a living nightmare to get financed," Fraser said.
Information from Times wires was used in this report. Mark Puente can be reached at [email protected] or (727) 893-8459.