HUD has previously announced new procedure for approving condominiums for FHA-insured mortgages.
Effective with case numbers ordered on February 1, 2010, FHA Spot Approvals of condominium projects will no longer available. Most lenders will require that a condominium project be approved with FHA or they will not underwrite the mortgage application.
A few lenders will run non-approved condominiums through the HUD Review and Approval Process (HRAP) method PROVIDED that the condo project is not already working with another lender for approval. The â€œturn-timeâ€ for HRAP approval is expected to take 4-6 weeks.
Due to these changes by HUD, the Veteranâ€™s Administration and Fannie Mae have both announced that HUD approval of condo projects will no longer be eligible. Projects secured by VA financing must be approved by VA. Conforming loans must meet Fannie Mae or Freddie Mac requirements to be eligible.
FHA has made the following changes to its requirements:
â€¢ The minimum required number of units in a project is reduced from 4 to 2
â€¢ Owner-occupancy ratio requirement within a project is reduced from 51% to 50%
â€¢ Pre-sale percentage within project is reduced to 50%
â€¢ FHA Concentration level is increased to 30%
â€¢ One year waiting period for conversions is eliminated
â€¢ Spot Approval is eliminated
In order to address current housing market conditions, FHA has temporarily waived some of the provisions of the new guidance for case numbers assigned on or after 12/7/09 through 12/31/10:
â€¢ FHA Spot Loan Approval process is extended to case numbers assigned on or before 1/31/10
â€¢ FHA Concentration requirement increased from 30% to 50% with the ability to permit FHA concentration up to 100% if the project meets certain criteria
â€¢ Owner-occupancy ratio permitted to 50% of the number of presold units when the project is proposed, under construction or still in the initial marketing phase
â€¢ Presale requirement reduced to 30%
To see whether or not a condominium project is approved by HUD, go to https://entp.hud.gov/idapp/html/condlook.cfm.
For additional information, go to http://www.hud.gov/offices/hsg/sfh/faqs/atl1val.cfm.