FHA has announced new clarified guidelines (Mortgagee Letters 46A & 46B) for condominium project approval and recertification and has provided a transition strategy that will help keep the condominium market moving for another year. Here’s what you need to know:
* All currently approved condo projects will remain on the FHA approved list.
* Projects approved prior to October 1, 2008 will require recertification by December 7, 2010.
* Projects approved after October 1, 2008 will require recertification 2 years from the initial approval date.
HOWEVER, this life raft has a few holes:
Spot loans are eliminated on case numbers on or after February 1, 2010.
Lenders must certify on every loan file that currently approved projects continue to comply with the following or project is ineligible for FHA lending:
* Investor Ownership: One investor may own no more than 10% of units.
* Delinquent HOA Dues: No more than 15 % of total units can be in arrears (more than 30 days past due) of their condominium association fee payment.
* Owner-Occ Ratios: At least 50% of the units must be owner-occupied.
* FHA Concentration: 50% of units may be FHA financed with allowance to 100% (except for new construction and conversions) when:
o Previous 3 criteria above are met.
o Project completed > one year and all units are sold.
o HOA is controlled by owners
o Project budget shows 10% capital reserves.
"The information provided has been based on rules and regulations issued by Federal Agencies and interpreted for you by MortgageCurrentcy.com. Interpretations are not guaranteed but we attempt to make them both easy to understand and help you sell more real estate. Check with your local and state authorities to ensure that you meet all requirements and disclosures."
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