FHA Loosens Criteria For Condo Approvals
Today I received an email from Dan Dobbs of American Commerce Mortgage with the following info.
Effective Sept 23 FHA relaxed 5 key criteria granting HUD approvals for condo projects.
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With less than 30% of projects approved in So Cal, this change can put more $$ in your bank account within 45 days.
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A Hud approval increases the projects affordability by expanding the access to FHA lending (3.5 percent down) vs. non-approved projects which require 20% down in most cases.
The 5 criteria in order of importance are:
1)A single investor can own up to 50% of a project development (vs.9.9%). This is particularly important in developments with less than 10 units; as owning just 1 unit crossed the threshold.
2)Although the current 15% rule (of owners being late on their HOA dues) still applies, the 30 day definition is expanded to 60 days.
3)Insurance requirements have been clarified.
4)The statutory liability of condo board members and officers have been reduced and clarified.
5)“Mixed use” projects (commercial and residential) can now have 35% commercial space (vs.25%). This is of particular importance in the high density and urban area such as Los Angeles and San Francisco.
There’s two ways to go when applying for HUD approval.
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One you can do it yourself but based on conversations with agents thru the years, it’s a tedious and drawn out process (typically 6 months or more).
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Or you (and or your seller) can use a condo certification service.
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