FHA CONDO APPROVALS HALTED 10/01/2009 … New, existing and conversions all affected…
– from one of our favorite mortgage voices, David Reed, CD Reed Mortgage Bankers, Austin
This is a big one. Effective for all case numbers issued on or after October 1 of this year, all previous FHA condo approvals will be eliminated and the condominium project will have to be recertified by HUD.
When lenders order a case number from HUD in order to process an FHA loan there needs to be a property address. And if the property is a condo then you can pretty much forget about buying that condo until the project has been blessed by HUD or one of HUD’s approved lenders.
This will bottleneck HUD and will effectively shut down condo sales until these units are HUD approved. This is a nationwide ruling.
For years, as long as a condominium project was approved by HUD just once, that approval would last forever, regardless of how many units were owner occupied or whether or not one person owns 10% or more of the project. With an FHA loan and a previous condo approval, it was smooth sailing.
There is one exception and that’s for newer condos who have received HUD approval after October 1 of last year but everyone else must get recertified.
If you’re an active listing agent who is marketing condos and have banked on the project’s FHA approval then you must immediately begin working with an FHA lender to get the project approved and beat the rush.
If you’re an agent working with buyers who are exploring condos and they’re FHA approved it’s critical that you get them off the fence and find something to buy right away before the October 1 deadline.
FHA condos must pass similar muster as their conventional brethren such as percent of owner occupancy (50%), no one entity can own more than 10% of the units, no more than 15% of the owners can be more than 30 days past due on their dues and so on. Further, each approval will last for two years before the approval must be re-issued.
Oh, one more thing? FHA “spot” approvals have also been eliminated as of October 1.
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