If this is true then condo owners & buyers should be outraged - HUD and FHA new guidelines and the not so level playing field

Pretty scary isn't it?  amazing that our govenment has proven once again that "they" are above the rules applied to regular situations....

Do I really nee to explain?

HUD is a government-owned home. And the government is famous for making others live by its rules. Rule they ignore.

But you knew that! =)

Wow, I'm shaking my head - it just goes to show that we'd better check and ask questions in every situation. There is no status quo in our current market.

Once you use the word government in any post, you know that the answer is simple.  The goverment usually gets in wrong in regards to anything associated with Real Estate.

Ah, yes.  The government.  Gotta love the 'standards' that get designed into the system.  Yet another example of how things don't work. 

But at the same time we seem to need the government involved as their lack of oversight on the bankers helped us fall into this morass that we're in.  Yes, big double standard but I understand the point that Peter #5 makes that we need to keep the loans flowing.  It seems to me that they need to allow the financing on all units if they allow for one.  Maybe that will help the overall market.

Kris

The new Assistant HUD Secretary is now a member of AR.  Maybe you can look him up, and direct this question to him.

I'd be curious to see what he has to say.

Good post....very enlightening.

I take the position with my clients that you cant buy a condo unless you have cash. Although there is a mortgage broker I know that says she can get it done with 30% down. There are a few exceptions; the certain few developments that are on the approved list and owner financed properties for example, Thanks for pointing out another exception. I wouldnt bet that the banks are willing to accept this exception however.

As to why the double standard makes sense..The government already owns the property...to guarantee a mortgage does not increase their risk exposure, like a new mortgage would.

#5 has it right.  On a HUD REO, that property is costing HUD money every day it sits unsold to a new buyer.  With that being said, HUD is willing to allow a new buyer and take a risk on the stability of the condo project given that it already has exposure on that particular unit.  It is not willing to take on an additionalunit in the building where it is not currently on the hook for, thereby increasing its exposure in a particular community.  Fannie Mae has essentially the same guideline for its REO condos purchased with its exclusive HomePath program. 

While spot approvals have been eliminated, HUD replaced it with the Direct Endorsement Lender Review and Approval Process (DELRAP).  DELRAP is available to select lenders that HUD has deemed to have staff with knowledge and expertise to review and approve condominium projects and determine a project's approval.  Most existing condo projects will fall into this approval type. 

Lenders or HOA's may submit project directly to HUD under the HUD Review and Approval Process (HRAP).  Condos requiring HRAP include those <12 months old and those located in FL. 

In addition, the FHA concentration will be increased temporarily to 50%.  If you are working with an experienced lender with DELRAP authority, you should see very little disruption due to the new FHA condo changes.

Hi Kris, thanks for bringing this to our attention.  With so many units going into foreclosure in Michigan, I have also wondered how this might affect developments which were once approved but now have different owner occupied numbers due to the housing crisis.

Kris - on top of all the other changes this one makes no sense. We shouldn't be surprsied - the governemtn seems bent on making things as difficult as they can, along with the banks, as opposed to doing more to help move invetnory adn help folks who really need it. It is very difficult here to find any condo complex that can go FHA, with lack of approvals, high HOA deliquenices, etc.

Jeff

As much as I would like to slam bureacracy, I have to agree with #5 and #31 on this one...

Yes it is true, but there is a bright side to this.  Almost all HUD homes qualify for some type of FHA financing, either 203(b) or 203(k).  The appraisal has already been done as well as the pest report and home inspection.  HUD will also pay the escrow fee if you use thier title company of choice.  If you have FHA approved buyers, do a property owner search, make a list of all HUD owned homes that haven't hit the market yet and send your buyers out to see if they would be interested in them.  Owner-occupant buyers have priority over investors, so there is a lot of opportunity to get your buyers into a condo that wouldn't normally qualify.  ALSO, HUD offers up to 5% of the offer price to the selling agent for their commission.  I know of only one drawback to bidding on a HUD home, there are no contingencies, so if you don't go through with the deal the buyer forfeits their deposit.  Double standard?? Sure, but use it to your advantage. 

Kris, thanks for the information. We have a lot of problems with approvals but had no knowledge of the HUD owned properties.

Different rules for different people is becoming standard practice in Govt. I'd believe anything. They are putting a whole new meaning to Lifes Not Fair. All we can do is the best we can.

Why?  How come?  Seems to be explained in some of the comments.  But is STILL doesn't seem right.  Then again, I've changed my name to ALICE IN WONDERLAND because I'm totally AMAZED (not in a good way either) at what is going on.  Our LOCAL market didn't have the over-speculation of condos, and kept current with owner-occupied.  Since this isn't a vacation destination or second home mecca -- the Metro Portland condo market is being sucked dry when the FHA changed the rules of the game on Feb. 1, 2010.  People who didn't close by then, had to bail on their purchase.  Many first time buyers can ONLY afford condos, and the 3.5% down was extremely affordable. NOW . . . the geniuses running the program . . . broad brushed ALL FHA condo deals . . . when it DOES NOT APPLY to our market!!   Yes, having the HOA become 'registered' or approved, is all well and good.  But there are deals already DEAD in the water now.  THANKS once AGAIN Federal Government for the brainacs who put policy in place.  Your 'unintended consequences' are NOT helping.

What's the surprise? Isn't the government always biased in favor of the government? LOL

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Good Lord Kris...

That really sucks. Surprising? Not really. It's getting harder and harder to be surprised by this nonsense :)

On a LOL note, I was going to flag you for "Excellent Post" but, it looks like someone already did :)

TLW...ROAR!

You betcha...seen this inequity here as well and with no more spot approvals...condo sellers could be the next big wave of non stop bleeding