I have a client that just went under contract to purchase a condo. The subdivision has never been approved for FHA financing. The lender said it would be no problem we just need to get a spot approval done. Well he called the HOA to get the paperwork filled out for the spot approval and they want $350 to fill out the paperwork. The lender told me that his experience has been that this is normally about $50 to $100 not $350. I also called other lenders and they confirmed what he said.

What has your experience been in this situation? I want to go back to the HOA and talk to them about overcharging my client but I would like to hear what the industry has seen as a normal charge.

I have never heard of "spot approval." Regardless of the cost can it really be done in a timely manor? Good Luck!

If paying the HOA higher-than-usual fee will help you close your transaction, then it is probably worth it to pay now. Maybe you can sort it out later, or ask for reimbursement. Try to get Buyer or Seller to pay the HOA fee so you are not stuck with it.

I heard that spot approvals are no longer going to be allowed after October 1, 2009. But you'll need to verify that on your own.

Thanks for the replys.

After further research we have found out that there has never been an FHA approved in that subdivision. I spoke to my client and he has switched to a different loan which does not require the approval. It was the loan I suggeted he go with in the first place but he was stuck on using FHA. I was just trying to help him get what he wanted. Terms and payment are similar so either loan is good but when there is an additional fee with a chance that it will not get approved then it was time to change.

Caveman, your right, I also read about the spot approval going away.