It has came to my attention that some agents and buyers are still unclear with the new condo changes that are coming up for FHA. Deadline has been pushed from October 1st to November 1st, 2009.
In the past, you only needed to satisfy one of the following two criteria to finance a condo unit using FHA financing.
1.) The Condo Project has a FHA warranty
- This requires the Homeowners Association of the condominium project to apply and receive a warranty on the project from the HUD.
2.) The unit must pass a questionnaire called a “Spot Check” done on an individual basis
As of right now, after November 2nd 2009 FHA is voiding all condo project approvals that were done BEFORE October 1, 2008. This means FHA loans will not be able to be done in an ineligible project until it is re-approved which will be a difficult and lengthy procedure! A project approval will cost $1,500 and up and FHA is now going to require an attorney's opinion letter, which can be another $800 or higher.
Spot FHA condo approvals will no longer be allowed
- This means that if you are a buyer or an agent with a condo client who wants to buy or sell FHA, you should get them to do it NOW. After November 2nd, the whole project will have to be approved for just one FHA loan and it will be a long and tedious process.
· Project approvals are currently taking 6-8 weeks. If FHA holds to their current November 2nd rules, and some 55,000 condo projects nationwide have to get re-approved, who knows how long an approval may take.
Only 30% of the loans in any project will be allowed to be FHA loans
- For example in a 30 unit project only 9 FHA loans will be allowed. Since FHA is the preferred program currently for most condo buyers, condo sales for the remaining 21 units will be difficult.
Prosperity Mortgage Company
4701 Columbus Street Suite 300
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Tina Merritt and the ALL757 Network can be reached at email: tina@tinamerritt.com or 757-287-6338.
The ALL757 Network consists of both buyer and listing specialists helping buyers and sellers in Virginia Beach, Chesapeake, Norfolk, Portsmouth, Suffolk, Isle of Wight County, Hampton, Newport News and Poquoson, Virginia.
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I find this whole thing completely confusing. Even after reading the document you linked to, I'm still clueless on how to determine if a buyer can get FHA on any given condo. The HUD list is pretty useless too since it doesn't list properties by address and not many agents know the "name" of the development. I'm ready to give up trying to get FHA buyers into condos unless I can get a clearer picture of which properties will be eligible. It's already tough to get a listing agent to look at an FHA offer. Seem the new rules will make it impossible.