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New FHA Condominium Approval Guidelines ........ New Effective Date.

I do not have all the details yet, but was I informed this morning at out Monthly Sales Meeting, that we have received word that the New FHA Condominium Approval Guidelines will now not go into effect until December 1, 2009. This is great news, because it means that Spot Approvals will continue to be available until then.

We also received word that even though the New FHA Condominium Approval Guidelines will not go into effect until December 1st, that the change on "The Right of First Refusal" restriction will still go away on November 2nd. This would mean that for at least one month (and in my opinion FHA will continue to delay the New Approval Process) that we will be able to do Spot Approvals on Condominium Complexes that have "The Right of First Refusal". There is also early indication that the new proposed 30% limitation on available FHA Loans within each Condo Complex will be increased to 50%.

No this is not official yet, and I would normally wait to put out this kind of information until it was made official, but our source is excellent, and there is a lot of concern about the new changes with only 2 1/2 weeks left before they were to go into effect. Even though a new Mortgagee Letter will be published within the next couple of weeks announcing these changes, I felt that a little heads up notice was appropriate. As soon as I know that the New Mortgagee Letter has been published, I will provide a link to it.

There will be other changes besides the ones that I have mentioned, but I do not have any details on those yet.

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Info about the author:

George Souto is a Loan Officer who can assist you with all your FHA, CHFA, andConventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com

Posted by George Souto on 10/16/2009 02:26 PM

Comments (19)

FHA Condo Approval Changes in the Mortgage / Finance Channel

fha condo approval

Originally posted at: George's Blog: New FHA Condominium Approval Guidelines ........ New Effective Date.

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19 Comments on New FHA Condominium Approval Guidelines ........ New Effective Date.

OCT

George,

By possibly hiking the condo complex limit for FHA loans to 50% seems to indicate that they see now less risk in them. Prices obviously are stabilizing.

George, Your back!!! This is such great info to be letting my clients know. I am so glad they will be changing it to 50% . I've missed you on here, you must be a busy man!!!

George,

Debby said it: "I am so glad they will be changing it to 50%."

The 30% restriction is adouble edged sword! By not refinancing more units they reduce the value of all the units, but having more FHA units traditionally reduced all values.

It's a conundrum!

Bill

Hmm delay until DEC - I sure hope your instincts on the FHA continue to delay the new process are correct.

George.. You have just made my day.. or should I say month. What a relief. No "Right of First Refusal".. and the spot approvals still going strong for one more month...

Thank you for an early Christmas present. :)

valerie osterhoudt

Esko that could be one reason, the other might simply be that 30% is to low. The big question is going to be how they are going to monitor this on presently approved condo', my guess is that they will not.

Debbie I don't know if I am back writing blogs, because I am still pretty busy with Borrowers, but I always try to find time to comment on your blogs :) :)

Bill with Conventional Loans being hard to do on Condo's these days especially for first time home buyers who tend to have very little for a downpayment, FHA will have to loosen up even more than the 50%.

Kathryn, I can't see how they are in anyway ready for this change. They are having a hard time keeping up wih the approvals that they have now, so how in the world are they going to handle the flood of Condo Approval request that they will get once they take away the Spot Approval? I don't know of any DE Lender around here that is going to take on the responsibility of doing the Condo approvals themselves. Every DE Lender that I know will still be sending them to FHA for them to do the approvals. Maybe as time goes on DE Lenders will start to take on that responsibility, but not at the start.

Valerie I was happy to hear this news this morning myself :) :)

George -- I am glad this has been delayed and think there are a lot of things that need to be worked out. I am not clear on what "right of first refusal" means in this context... if you have a source for more information that would be helpful. I am not sure I understand the 50% rule either.... especially if they want the homeowner ratio to be over 50%... most folks don't have 20% to put down on a condo and have to go FHA... so I am not sure how this is going to play out.

Hi George! I am in the dark about some of this, however when the information is needed, there is a complete library you have prepared for us to get these answers. Thank you.

OCT

50% sounds like .....Christmas?

Joan, the "Right of First Refusal" put it the simplest way that I can explain it, give the Condo Association the right to by the Condo first before the Condo owner can sell it to someone else. FHA always viewed this as a restriction on the right of the Condo owner to sell the Condo, and they have not allowed those types of restrictions in the past. The 50% refers to the number of Condos within a Condo Complex that FHA will allow FHA Loans to be done on. The remainder would have to be Conventional Loans or some other type of financing. What they are trying to do by having that limitation is to limit the amount of risk that they are willing to take withing any Condo Complex.

Diane, who knows some day you maybe be doing other things in Real Estate, and have a need for some of this information.

Sally compared to the original 30% that they were proposing, 50% is like Christmas but I don't know how they are going to be able to track it especially on already approved Condo's.

George - How many condominiums in your neck of the woods don't have a FHA approval already? When I review the condo listings arond the New London area most of the projects have the approval.

George,

This is good news for those purchasing condos... Thanks for the update.

Ann Hayden in chilly Wildwood, MO

OCT

"Right of First Refusal" still appears in many Condo Master Deeds. Association leadership MUST act quickly to expunge this language so that future financing will not be hampered.

Phil There are a number of Condo's in Middletown and Cromwell that are not on the list for various reasons. Some have just not applied for full Condo Approval, and others the "Right of First Refusal" has been the issue. I have done a number of Spot Approvals, on the Condo's that don't have a "Right of First Refusal" issue, and with the Spot Approval going away, that is going to be a big issue for me. There are Towns that will benefit from the New Approval Process, like Branford. Most of the Condo's in Branford have the "Right of First Refusal" and I have not been able to do Loans on them. Hopefully they will take advantage of this change and open it up the FHA.

Ann you are welcome.

Tom with the new proposed FHA Approval process, the "Right of Frist Refusal" will no long be a problem, but doing away with the "Spot Approval" is a big mistake in my opinion.

George, Thanks for keeping us in the loop about these changes to FHA Condo Approvals. It's good to know.

Jen, you are very welcome.

OCT

I had heard this last week George and was wondering what took you so long to write about it:)

OCT

George Thank you for always keeping us up-to-date. I saw Bill's comment, he is so funny. I want him to know in previous comments you indicated you were very very business therefore you had to cutback on blogging.

Have a great weekend.

Bill I know I am a real slacker, falling down on the job ............ LOL

Jennifer, Bill keeps me on my toes. I have to try to create more time to blog, but it has been hard.

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