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.