fha spot approval
In order to qualify for fha "spot approval" on a condo unit financing there is a requirement that for projects with under 30 units no more than 20% of the units may have fha loans. If the project is very very small with only 6 units, the 20% would come to 1.2 units (20% times 6 units). When the product of the formula is a partial unit does the fha allow for the additional unit; i.e. 2 units with fha loans would be allowed on a 6 unit condo complex or would you round down to only 1 unit in the complex allowed to have an fha loan? Have looked simply everywhere for this info and cannot find an answer.
Thanks everyone for the replies. Unfortunately I now have another "spot approval" question and you will see why I wanted to be very very sure that the 20% answer was answered by someone with technical knowledge of the code and regulations and bulletins and letters.
My son back on September 15th put earnest money on a downtown condo in a six unit building. His financing contingency date was extended to 10/15/08 and he was assured he would get financed except for some last minute paperwork that needed to get in. He is only 23 years old and went forward thinking he would close on his closing date of 10/31/08. TODAY!! Two days ago the underwriter rechecked and another guy was also buying a unit in the building and had gotten a "spot approval" September28th that just showed up on a title search (it must take some time in King County for this info to hit the system). That loan appears to have negated my son's loan. We are sick about this and he is now going to lose his earnst money which is a financial catastrophe for a kid. It would seem therefore that with FHA loans that are supposed to benefit people like my son that the actual closing date and the financing contigency date must always be the same date to avoid this issue. Perhaps there should be some way to get a "spot approval" case number on the first day so others can see if there are other FHA "spot approvals" waiting. I would appreciate your comments or suggestions. This is a very unhappy Halloween.
I talked to a couple of people that I consider FHA experts and that was their comment. It keeps their exposure down for small condos.
Fred, Is that the answer from your firm's FHA underwriter? I know that Rhonda from Seattle Mortgage was also going to talk to her firm's FHA underwriter regarding partial units; or required rounding up or down; and/or underwriter discretion in this situation.
Go here for the 20% requirement:
http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/fi…
It's in Mortgagee Letter 96-41 issued by the FHA
Where did you find the 20% FHA loans as a limit. I have not seen that.
Your question is excellent and I'll be checking with our on-site FHA underwriters this morning. In the meanwhile, I have a link below for an article I've written about making sure your condo is FHA approved.
I don't know the answer to that one, but you can check to see if it's already approved here:
http://condopudbuilder.vba.va.gov/2.2/frames.html
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