For any potential purchasers to close on an FHA insured loan, the association must be able to demonstrate that it maintains this level of fidelity insurance. If the association’s fidelity insurance does not meet FHA requirements, the board must decide whether or not it should raise the association’s coverage, by balancing the increased premiums with the possibility of FHA insured financing.
It is very important to fill out the mortgagee questionnaires accurately and correctly to avoid any disputes or allegations of impropriety in the future. Again, the association must have enough fidelity insurance to cover all of the money in an association’s reserve account, plus three (3) months worth of assessments. If you have any additional questions regarding fidelity insurance, or if your association would like to apply to be on the FHA list of approved condominiums, please contact Kaman