HUD has issued new condo guidelines effective December 7th, 2009.
However, HUD's making several temporary exceptions to the new rules due to "volatility" in the condo market.
The new FHA policies included in ML 2009-46B cap the number of condo units in a building that can be financed with FHA insured loans at 30%.
And 50% of units must be owner-occupied to be eligible for FHA financing.
However, ML 2009-46A allows exceptions to the FHA concentration & owner-occ. requirements until December 31st, 2010.
It's as simple as "government healthcare." :o)
HUD's also extending “spot loan approvals,” due to concerns about the condo market, and the new effective date for the elimination of the spot condo approvals is for all FHA case number assignments on or after February 1st, 2010.
Clear as mud?
Reverse mortgage lenders have voiced concern over the risk involved with their Direct Endorsement underwriters authorizing a condo without proper guidance from HUD, so hopefully the new Mortgagee Letter will help alleviate those concerns.
According to ML 2009-46B, lenders will have 2 condo project approval processing options.
The applicable documentation requirements will be the same for each option:
1. HUD Review & Approval Process (HRAP).
2. Direct Endorsement Lender Review & Approval Process (DELRAP). This option is only available to lenders who have unconditional Direct Endorsement authority and staff with knowledge and expertise in reviewing and approving condo projects.
Under DELRAP, lenders must provide the condo approval or denial documents to FHA within 5 business days of final disposition.
These documents must be uploaded using .pdf format through FHA Connection.
Sincerely, your friend,
P.S.: To get a free CD on reverse mortgages, please go here right now.
