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I guess after awhile, you get used to it. Or maybe that’s just what they’re hoping for.
Just as nearly everyone was sensing a leveling off of the housing market decline…dare I even say…perhaps enjoying a modest recovery, the government steps in with their, “We giveth (tax credit) and we taketh away (read on!).” Their favorite whipping boy again? Condominium. Somehow the root of all evil.
On May 17th, the Veteran’s Administration issued a circular – not widely distributed, as we just found out about it on June 2nd and the majority of lenders and REALTORS haven’t heard about it even today – stating that effective immediately no more VA condominium loans could be closed until the builder had submitted for separate VA Condominium Project Approval. Just this past December, they reaffirmed their long-standing position of accepting with reciprocity HUD’s Condominium Project approval. But then a short four and a half months later, apparently with great introspection, the VA now claims, “We’ll still accept your HUD Condominium Project approval, but only if you don’t plan to add any units to the condominium by Amendment after December 29, 2009 (read: additional phases).” Really? Sorry, but that’s how condominium works. You record an initial phase and then as you create sales you expand the condominium with Phase Amendments until you hit build-out. So with only a handful of exceptions state-wide, this new ruling affects all condominium developers/builders.
And with no notice, no phase-in period. Oh, and did I mention…VA admits they only have one person for the Commonwealth who does the cumbersome job of reading through about 300 pages of documentation that represent such a submission.
I don’t know about you, but I have nineteen VA loans set to close in the coming 40 days. The majority are veterans who are expecting their $8,000 tax credit check if they close by June 30th. Not to mention that they are also looking for a place to live. With utilities set up. Movers scheduled and hopes and dreams high. So assuming we shut down our company for any other function (like, say, building these nineteen homes) than focusing on getting these packages put together and FedEx’d to Roanoke (which will take about 5 days of solid work), perhaps we can save about 1/2 of these closings. I would think my four community submissions alone would tie up this poor lone wolf at VA for the balance of the month (the VA has promised us “expedited review”, but normal HUD turnaround on Condo Project approval is 90 days). But I’m guessing I’m not the only builder in the Commonwealth who is doing condominium.
Do you want to be the one to tell your very excited buyer (and many are first time buyers) that, oh yea, the VA determined you shouldn’t get your home after all as they decided to change their rules with no notice only 45 days before the deadline for closing these homes. I’m hoping the VA can add some staffing at their phone center to make those calls for us. But I’m not holding my breath. I’m afraid this is going to get ugly.