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FHA the real story...

By
Real Estate Agent with Ranch & Resort Group ​L​I​C​-​3​2​0​9​7

I have received from the HUD office all the item pertaining to condo developments and the guidelines at every possible stage. Whether it is new, existing, annexation, or additional phases different rules apply to the different types. I believe on common misconception realtors have is that once your project is FHA approved that that also means that your Borrower is FHA approved for financing. Which is not the case. The FHA condo approval has two parts. First the Condo development itself must be approved and then each individual borrower must meet the FHA condo requirements. This is a separate set of rules for the borrower not the development. This is where the 51% o/o comes into play as well as the questionnaire. We have been seeing realtors advertise units as FHA approved when in fact all the have is the development approval but are still unable to get financing for the first 51% of the units because of the 51% requirement for o/o. I know a little confusing I almost messed it up just typing it...lol

Comments (4)

Barb Van Stensel
Chicago, IL

OH, I hear on that one.  I'm also seeing Realtors advertise 5% down on a three and four unit and I don't think that flies with underwriting.  Be careful what we advertise, eh?!!!

Oct 02, 2008 09:04 AM
Raylene Lewis
Century 21 Beal, Inc. - College Station, TX

Good information. Thanks for sharing!

Oct 02, 2008 09:05 AM
Jared Pomranky ~ Detroit Foreclosures
Urban Detroit Wholesalers - Detroit, MI

That's a big mistake, especially if the builder thinks that they can get FHA buyers for the first 51%.  So for a buyer to actually buy a condo with an FHA loan, a requirement is that 51% of the units are already owner occupant? (just had to clarify)

Oct 02, 2008 09:06 AM
Nathan Goodman
Ranch & Resort Group - Bozeman, MT

The worst part is there is no place for the first 51% to get secondary financing because of the non warrantable status...

Oct 02, 2008 09:22 AM