FHA News : Updates on FHA Condominium Changes

Written By: Stacey Sprain, Op-Ed Writer 

Updates on FHA Condominium Changes

Since last week’s article, I’ve learned of additional information you may find helpful as we all wait to hear from HUD on revisions to Mortgagee Letter 2009-19.

I posed a number of questions to my client contact at HUD and received prompt responsive answers to what I asked. Here is a list of the Q&A that resulted:

QUESTION TO HUD: I’m hearing that very few Mortgagees will be utilizing the DELRAP approval process which obviously means HUD will be potentially overwhelmed with project submissions for review and approval. Has HUD expanded staffing within the HOCs to deal with the increased demand for project reviews and approvals?

ANSWER FROM HUD: We indeed foresee some back up as to time frames because there have been no additional funds allocated to increase staff in these areas.

QUESTION TO HUD: Does HUD intend to centralize the processing of condo review requests or will we continue submitting documentation to the appropriate Homeownership Centers for project reviews and approvals?

ANSWER FROM HUD: HUD has no plans to centralize condo reviews and approvals; therefore, you are correct in that you will continue submitting to the HOCs.

QUESTION TO HUD: Does HUD intend to perhaps offer some sort of Checklist or Questionnaire of sorts so we can easily determine if a project is potentially approvable and exactly what we need to submit for full project approval?

ANSWER FROM HUD: There will be more detail given about the review and approval process in the anticipated Mortgagee Letter. We have not heard that a checklist other than the list included in the original mortgagee letter will be included.

The Mortgage Bankers Association Advocacy group communicated their involvement in the pending revisions to ML 2009-19 late last week which provides a bit more clarification on what we might expect when HUD communicates the anticipated changes. Below are highlights as communicated by MBA:

1. FHA concentration will remain at 50 percent.
a. In "well established" project, the concentration may go up to 100 percent.
b. "Well established" buildings show clear financial stability, including a minimum of 10 percent reserves, owner occupancy of 50 percent, and a transfer of title.
c. In the ML, HUD will provide an explicit definition of "established."

2. Owner Occupancy will remain at 50 percent.
a. REOs will be excluded altogether from calculation.

3. Pre-sale requirement will be 50 percent.
a. FHA will accept a spreadsheet from the developer as certification under the pre-sale requirement.
b. Additionally, FHA has created a specific document that developers must sign to certify that all of the information is accurate.

4. Temporary Certificate of Occupancies will be accepted.

5. All 40,000 + condo projects currently approved will remain approved

6. HUD Review and Approval Process (HRAP) is permissible in Florida.

7. The ML will clarify that under Direct Endorsement Lender Review and Approval Process (DELRAP), a lender is not responsible for another lender's approval process (specifically, additional project review is not required).

8. New ML will clarify that reserves should be at 10 percent, if not then a lender can request a reserve study.

9. New ML will add specific guidance on insurance (specifically, gap insurance).

10. Transfer of control requirements will be dictated by the state and local requirements.

11. New ML will clarify the definition of site condos.

12. New ML will clarify phasing requirements.

Need FHA Training? CLICK HERE: http://www.FHA-Classes.org

Based on everything I’ve learned recently, I want to further my previous advice. I wouldn’t recommend sitting and waiting for the new Mortgagee Letter. Now is the time to start putting together lists of condominium projects in your market areas and determining whether or not they are currently on the FHA approved condominium project list or if you will need to gather documentation to get the projects submitted for review and approval. This is an excellent opportunity to set meetings with realtors and builders and get those condo project connections established and get moving on this. Don’t put it off or your future FHA business may be held up as a result of procrastination!

Here are the HUD Homeownership Center condominium project review submission addresses for all four respective HOCS, which I have verified remain current as of right now:

Atlanta Homeownership Center-Alabama, Florida, Georgia, Kentucky, Illinois, Indiana, Mississippi, North Carolina, South Carolina, and Tennessee.
U.S. Department of Housing and Urban Development
Atlanta Homeownership Center
Five Points Plaza
Attn: Technical Support Branch I (FL, NC, SC, TN)
Attn: Technical Support Branch II (AL, GA, IL, IN, KY, MS)
40 Marietta Street
Atlanta, GA 30303-2806

Denver Homeownership Center- Arkansas, Colorado, Iowa, Kansas, Louisiana, Missouri, Minnesota, Montana, Nebraska, New Mexico, North Dakota, Oklahoma, South Dakota, Texas, Wisconsin, Wyoming, and Utah.
Condominium Approval Requests
Office of Single Family:
U. S. Department of Housing and Urban Development
Denver Homeownership Center
Attn: Technical Support Branch, 21st Floor
1670 Broadway
Denver, CO 80202

Philadelphia Homeownership Center- Connecticut, Delaware, District of Columbia, Maine, Maryland, Massachusetts, Michigan, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, Vermont, Virginia, West Virginia.
U.S. Department of Housing and Urban Development
Philadelphia Homeownership Center
The Wanamaker Building
Attn: Technical Support Branch 1 (ME, VT, NH, MA, CT, RI, NY, NJ)
Attn: Technical Support Branch 2 (PA, DE, VA, MD, DC, WV, DC, MI, OH)
100 Penn Square East
Philadelphia, Pa. 19107-3389

Santa Ana Homeownership Center- Alaska, Arizona, California, Hawaii, Idaho, Nevada, Oregon and Washington.
U.S. Department of Housing and Urban Development
Santa Ana Homeownership Center
Attention Technical Support-Condominium Reviews
Santa Ana Federal Building
34 Civic Center Plaza, Room 7015
Santa Ana, CA 92701-4003

Need FHA Training? CLICK HERE: http://www.FHA-Classes.org

About The Author

Stacey Sprain - As an op-ed writer, Ms. Stacey Sprain is currently a NAMP® Certified Ambassador Loan Processor (NAMP®-CALP). With over 15+ years of mortgage banking experience, Stacey is also a Quality Control Manager for a major mortgage lending institution. 



Opinion-Editorial (Op-Ed) Disclaimer For NAMP® Library Articles: The views and opinions expressed in the NAMP® Library articles are those of the authors and do not necessarily reflect any official NAMP® policy or position. Examples of analysis performed within this article are only examples. They should not be utilized in real-world application as they are based only on very limited and dated open source information. Assumptions made within the analysis are not reflective of the position of NAMP®. Nothing contained in this article should be considered legal advice.