During these difficult times many homeowners aren’t paying HOA fees. No one wants to enforce other neighbors to pay past fees, but it’s essential for a community to stay on top of this. The reality is when one homeowner isn’t paying their share of the HOA the others have to pick up the slack. A bad misconception many home owners have is the HOA is a profit center for the community. It isn’t by a long shot. Just a few homeowners who stop making HOA payments cut into an association’s budget quickly.

Nationwide, non-payment of HOA fees is among the top problems facing condo and single family homes says Thomas M. Skiba, chief office of Community Associations Institute in Alexandria, VA. When too many homeowners stop paying lenders may become unwilling to make mortgages or refinance properties in the community. Fannie May, for example, won’t guarantee loans in condominiums where more than 15% of the homeowners are 30 days or more overdue on HOA fees.

HOA committees must act fast to collect overdue HOA fees. Work with distressed homeowners with a payment plan. Seek help from experts about your collection options as your bylaws may govern. Consider taking any community privileges away like, fitness, pool and tennis. If a proper lease is in place you can make the renters pay the HOA direct once it becomes delinquent. Last but not least put a lien on a home that’s delinquent.

It’s now required for a bank or lending institute to pay HOA fees from the day of foreclosure to the day it re-sales. Any prior fees owned are not collectable from the bank or lending institute. However, the HOA can peruse the old homeowner for any delinquent HOA fees as a personal debt. Depending on your bylaws HOA’s may be able to garnish wages or sell back HOA fees to collection agencies.

In this state when you have a mandatory HOA it should be disclosured in the Purchase and Sale Agreement Exhibt Community Association Disclosure and or Sellers Disclosure. Every buyer signs documents at closing acknowledging they know of the mandatory HOA fees and agree to abide by its bylaws. HOA committees have no choice but to enforce them. This helps assure a stable community in many ways.

More than 20% of Americans do at least some of their work at home, so home offices are an attractive feature for many homebuyers.

If you’re one of the more than 20% of Americans who do some or all of their work at home, a comfortable, functional home office is a must-have. And it’s a feature that’s growing in popularity: When the National Association of Home Builders asked builders, manufacturers, and marketing experts what features would be important to future home buyers, 94% said a home office would be “critical” or “very critical.”

Still, when it comes to adding value, a home office ranks last among the 21 midrange projects analyzed in Remodeling Magazine’s annual Cost vs. Value report. Converting a 12-by-12-foot bedroom into an office costs a national average of $28,375 and recoups $13,648 at resale, for a 48% return on investment, according to the 2009-2010 report. Construction costs include custom cabinetry and work surface, wall-mounted storage, a wiring upgrade, and new floor and wall finishes.

Regionally, returns varied only slightly, with the highest rate of return, 56%, in the Pacific region, and the lowest, 41%, in the upper Midwest.

National average cost to convert an existing 12 x 12 room into a home office:

Job cost: $28,375

Resale value: $13,648

Cost recoup: 48.1%

Regional info: South Atlantic

Lots of changes were announced this week in regards to FHA Mortgages.

FHA is changing the upfront funding fee from 1.75% to 2.25%. You’ll still be allowed to add the funding fee to your mortgage. This will not affect the buyer’s monthly payments very much at all.

Credit scores less than a 580 will now be require to have a minimum of 10% down, this is up from 3.5%. Not really a big change as most banks currently require a minimum of a 640 score, so this shouldn’t be that big of a problem.

FHA has changed the seller’s contribution for buyers closing cost and prepaid’s. Now the seller’s contribution cannot exceed 3% of sales price, it was 6%. The closing cost is usually about 3% of the mortgage amount. Buyers will now have to fund the prepaid’s which are approximately 1% of the purchase price. This change shouldn’t have little effect on the market.

A major change is FHA will no longer do spot approvals for condos. This is a major problem for the condo market. Many condo buildings/communities are not currently FHA approved. We used to be able to get a spot approval. If the community met the FHA approval guidelines then it was spot approved. This procedure will no longer be allowed. The big picture for condos isn’t looking good right now. Today any condo purchase that’s mortgage is headed to Freddie Mac and Fannie Mae now requires a minimum of a 20% down payment. FHA is the only program with a minimum of 3.5% down payment. This is going to have a major impact on condos. We’re hoping FHA changes their policy in regards to this new ruling.

The condo market in Atlanta has been very tough the last few years. The new lending guidelines is going to create a lot more problems. Many condo owners don’t have the option to rent due to HOA rules. Condo HOA’s can cap the rentals to as little as 15% of the total units. Lenders will not lend money if the total rental to owner occupancy ratio is great than 30%. I feel you’re going to see more distressed condo situations in the coming year as money tightens for a potential buyer.

I want to be sure people understand that townhomes are not affected by the FHA changes the same as condos. If you don’t know the differences between a condo or townhome give me a call. I also have access to the FHA Condo Approval website. Call me if you want to know if your condo is currently FHA approved.