According to Dunn, who does a large volume of business in condos in and around Rancho Santa Margarita, roughly two-thirds of condo complexes in that community are not FHA certified.

It’s a national problem, but one that’s particularly pronounced in Orange County, where there are many associations — condos, planned single-family communities, commercial property associations, according to Wendy Bucknum, president of the Orange County Regional Chapter of the Community Assns. Institute.

According to the group, there are roughly 50,000 property associations in California, and more than 4,500 in Orange County.

Dunn said the number of FHA-certified approved associations in Orange County has dropped to about half from upward of three-quarters of associations having FHA certification in the past.

“All of those things coming together is really creating a perfect storm for a bad situation,” Bucknum added.

Recertification has not traditionally been difficult, but for one reason or another, neither condo managers nor condo boards are taking decisive steps to become recertified.

To be certified, associations have to show positive ratios in areas such as owner-occupancy, the concentration of existing FHA loans in the association, the number of investors who own in the association and delinquencies.

This “perfect storm” has turned many of these ratios negative for increasingly more associations, Bucknum said.

Many condo boards and condo managers are finding that adhering to these standards — standards that seem to be continually evolving — more difficult, Bucknum said.

“A lot of time you have self-managed communities and they don’t even know how to embark on this sort of thing,” Bucknum said.

For her part, Bucknum is facilitating meetings between local firms that specialize in condo association certification and the associations that are in trouble or have recently lost their FHA certification.

Bucknum’s association has also been lobbying members of Congress — including Reps. John Campbell, Gary Miller and Ed Royce — to convince them “this is going to be a devastating thing for associations,” Bucknum said, adding that she’s holding out hope of Congressional oversight hearings in the process.

In fact, members of Congress on the other side of the country have already moved to get involved in the matter.

Massachusetts Sen. Scott Brown on Nov. 8 sent a letter to Shaun Donovan, secretary of housing and urban development, stating concerns over the development and implementation of FHA’s condominium guidelines.

Brown’s letter specifically addresses his concern over the recent actions by FHA to deny mortgage funding to associations with special assessments or loans for property improvements.

Brown’s letter followed a letter sent to the secretary Oct. 31 from members of the Massachusetts Congressional Delegation, led by Reps. Barney Frank, Michael Capuano and Stephen Lynch, expressing concerns about FHA’s requirement that no more than 15% of condominium units be 30 days late in their assessments Many condo associations have well in excess of 15% of their units last in their assessments, and many that are already cash-strapped have no alternative but to seek loans to make needed improvements to keep their developments safe and attractive to new buyers, Bucknum said.

“When you only have 40% of the units in your association paying assessments, you don’t have the funds in those assessments, so you have to get a loan to do these repairs,” she said. “This situation is, with all these complexes not getting FHA approved, it’s a downward spiral.”

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