At the beginning of last month I wrote a blog FHA Condominium Expiration Dates Extended about HUD extending the deadlines on FHA Condominium Approved Complexes. Last week HUD made it official by coming out with Mortgagee Letter ML 2011-03 formally putting it in writing the guidelines for the extension.
This Mortgagee Letter clarifies the guidelines for extending the extensions previously provided in Mortgagee Letter ML 2009-46A issued in 2009. Mortgagee Letter ML 2009-46A provided the guidelines for approval of condominiums and expiration dates FHA case numbers assigned on or after December 7, 2009 through December 31.
On December 10th of last year I wrote in my blog that the expiration dates had been extended, but with different extensions depending on when the Condo Complex was approved. However, now it appears that Mortgagee Letter ML 2011-03 is extending all FHA case numbers assigned through June 30, 2011. The exception to the extension remains for "Spot Approvals" which they completely did away with on February 1, 2010.
ML 2009-46B which defined the guidelines for condominium project approvals remains unchanged. FHA concentration requirement are increased temporarily from 30 percent to 50 percent. With the exception that FHA concentration may be further increased to 100 percent if the project meets all of the basic condominium standards described in ML 2009-46B, plus the additional items stated below:
- The project is 100 percent complete and construction has been completed for at least one year, as evidenced by issuance of the final or temporary/conditional certificate of occupancy for last unit conveyed;
- 100 percent of the units have been sold and no entity owns more than 10 percent of the units in the project (for projects with fewer than 10 units, single entity may own no more than 1 unit);
- The project's budget provides for the funding of replacement reserves for capital expenditures and deferred maintenance in an account representing at least 10 percent of the budget;
- Control of the Homeowners Association has transferred to the owners; and
- The owner-occupancy ratio is at least 50 percent.
(Note: Real Estate Owned (REOs) units, and bank owned properties, may be excluded from the calculation of the required owner-occupancy percentage)
New condo's or condo conversions that meet the above guidelines, and 50% of the units in a project are owner-occupied or sold to owners who intend to occupy the units are eligible. Also proposed, under construction, or condo projects still in the initial marketing stage, FHA will allow a minimum owner occupancy amount equal to 50 percent of the number of presold units. But in the case of new construction, the pre-sale requirement are reduced temporarily from 50 percent to 30 percent and have to have copies of sales agreements and proof that they have a Mortgage Commitment from a Lender
(Note: Condo complexes with less four units are not eligible for this exception.)
As always I hope this helps. These guidelines can get a little confusing at times, and I hope that I have helped to simplifying them a little.
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Info about the author:
George Souto is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional 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, gsouto@mccuemortgage.com, or visit my McCue Mortgage Homepage.
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