FHA condo changes effective 2-1-10

By
Mortgage and Lending with Advantage Mortgage
Well, it was great while it lasted but the ability to do condo spot approvals through FHA has officially come to a close as of yesterday, February 1, 2010. As of today's date, any condo that is going to close using FHA financing will need to be approved either through the HRAP or DELRAP process. For those of you that like acronyms as little as I do, these two options are: FHA approval of condo or lender approval of condo. From what I have been able to investigate, there will be a lot of resistance from the lenders as far as approving condos. Why? Well, simply put, there will be a lot of risk that they take on when they approve a condo. Basically, any future activity of the condo is going to be their responsibility. I can't think of any lender that is going to be very happy to participate. There are still a few condos that are actively approved based on previously issued FHA approvals using the prior system. If you would like to check out a condo to see if it is approved, try this link: https://entp.hud.gov/idapp/html/condlook.cfm There are some professionals in our industry that are focusing on getting condo projects approved through the VA and through FHA. One individual is active here in the Northwest. Her name is Kim Bergesen and she has an incredible reputation in this arena. If you are looking at getting a condo approved, give her a call at (425) 344-5998. Be sure to investigage whether FHA financing can be obtained on your condo projects early in the process so that you can save yourself some headache. Thanks again for reading!

Comments (5)

Anonymous
cmp333

Question: Seconds before going into escrow during the closing process my lender declined my loan due to discovering an investor who owns more then 10% of the complex properties, making it impossible with current lender guidelines for anyone else to buy or sell in this complex until the investor sells or changes title to at least 5 properties. Can the HOA force the investor to do this and/or is there anything that can be done about this situation. ANY advice is appreciated

Mar 25, 2010 03:10 PM
#1
Mark Aalto
Advantage Mortgage - Portland, OR
NMLS: 116708

I'm really sorry to hear about your situation.  Typically a lender will review a condo questionnaire at the beginning of the process as opposed to the end of the process.  There really isn't anything that the condo can do to help you that I know of.  It is; however, going to make it difficult for anyone that wants to purchase in this project.  :(

Mar 26, 2010 05:02 AM
Mark Aalto
Advantage Mortgage - Portland, OR
NMLS: 116708

Another Loan Officer that I really respect sent me this comment:

Wow - that investor wasn't thinking.  He/She probably just dropped their value of their holdings by 20 to 50%.  I don't think there's anything the HOA can do.  HOA documents rarely restrict investor concentration or types of ownership, and frankly, it might not be possible to do so.  That sounds like a job for a real estate attorney.  Joel Grayson is an experienced RE attorney - 503-771-7929

 

Mar 26, 2010 05:09 AM
Anonymous
Anonymous

Thanks for your feedback, the property in itseld is not looking so good at this point-my agents are looking into a HUD waiver as well as seller financing and I know that the HOA's and other sellers are not very happy! I did pay for an appraisal, inspection and a loan fee plus the Condo questionaire do you know if I can recover any of these costs?

Mar 27, 2010 04:53 AM
#4
Mark Aalto
Advantage Mortgage - Portland, OR
NMLS: 116708

As far as the fees go I would talk with the lender directly and see if they are willing to help out with this.  A lot of Realtors and Loan Oficers are finding out about FHA requirements for the first time.  In addition, a lot of requirements have changed and even seasoned Loan Officers are struggling to try to give out accurate information.  I don't know how a HUD waiver would work but there will likely be a regional FHA office that the lender can check with.  It sounds like the condo itself is FHA approved - when the condo questionnaire was filled out there should have been information on there about investor concentration.

Mar 27, 2010 03:21 PM