Tag Archives: FHA Approvals

FHA And New Owner Condominium Financing

hudimgPrior to 2005, few condominium boards paid much attention to FHA financing. At the time, the FHA was only a small fraction of condominium loans (about 5%) and FHA buyers, due to smaller down payment requirements, were considered less committed to their purchased units....

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Why Get Hud Approval?

Earlier this year, HUD changed the rules on us. They will now only accept FHA approval requests through two processes. Those are DELRAP (Direct Endorsement Lender Review and Approval Process), and HRAP (HUD Review and Approval Process). Since DELRAP requires lender guarantees and lender risk, that won’t happen in the vast majority of cases. Probably over 90% of FHA funding will be done through HRAP.


And even more importantly, HUD stopped accepting “Spot Approvals” (those were done on an individual unit by a broker or lender @ contract time). Going forward, spot approvals cannot happen. The new HUD authority document, Mortgagee Letter 2009-46B (now supplemented by letters 2011-01, 02, 03, and 04), eliminates spot approvals. So, as depicted in the table below, all HOAs will have to be approved under the new regulations for any of their units to qualify for FHA funding.

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Troubling times for condo owners

WASHINGTON — Tens of thousands of condominium unit owners around the country may not know it, but their ability to sell or refinance could be jeopardized by a rolling series of federal government deadlines.


On Dec. 8, an estimated 2,200 condominium projects lost eligibility for unit sales or refinancings involving FHA mortgages because they had missed a key deadline for recertification set by the agency. Beginning next spring, another 23,000 projects with residential units totaling into the estimated hundreds of thousands could lose their eligibility as well.


What this means, say lenders and condo experts, is that unsuspecting unit owners nationwide could suddenly be cut off from an increasingly important source of mortgage money. In some markets where FHA accounts for 75 percent or more of first-time home purchases, condo sellers could be severely handicapped. In parts of the country with heavy concentrations of condos, such as California, Florida, New England, Washington, D.C., and the urban Midwest, the impacts could even depress sales prices.

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