More Condo Transactions Possible Courtesy of Recent HUD/FHA Changes

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Mortgage and Lending with NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 IL Lic 031.0006220/WI
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More Condo Transactions Possible

Courtesy of Recent HUD/FHA Changes

 

Today's homebuyers are increasingly reflective of the reality of modern life and its challenges ...

As shared in my recent post, "Mortgage Advice & Options for Un-Married Couples", non-traditional methods of home buying are becoming (often out of necessity) more common and popular, especially among younger homebuyers. 

 

Concerns regarding:

  • Home Affordability
  • Family Structure
  • Marriage
  • Finances
  • Student Loans
  • Employment
  • More

 

... are motivating buyers to seek home buying solutions beyond those utilized most frequently in the past.

 

One such solution historically popular with young buyers and those downsizing has been the purchase of a Condominium.  Condos are often seen as the perfect fit for their finances, needs, and lifestyle.

 

Oftentimes these very same buyers, if borrowing, find the Federal Housing Administration (FHA) financing an advantageous route to purchasing their condominium.   And here's why:

  • Down Payment:  The minimum down payment for FHA loans is 3.5% 
  • Type of Down Payment:  FHA Allows Borrowers to receive gift funds from Family Members (and in some cases, other ways as well
  • Credit Scores:  FHA allows Credit Scores well below Conventional Loan Requirements
  • Credit Histories:  FHA allows minimal, fair, and sometimes no-credit Borrowers to qualify, pending other factors
  • Co-Signing Borrowers:  With an FHA loan, Non-occupying Borrowers              (typically relatives) can be introduced as Borrowers to assist in income or credit support for the Primary Borrower
  • Employment History:  FHA is the most forgiving Loan Product regarding job tenure, job stability, length of employment, how income is received, etc.  
  • Interest Rates:  FHA loans typically run lower than Conventional Loans, when all else is equal


Until recently, restrictions placed by the Dept. of Housing and Urban Development (HUD) on condominiums have proven to be a deterrent to many condominium purchases.  I've written multiple articles addressing this specific financing challenge in the past.

 

But relief from some of these restrictions arrived on October 15, 2019, as HUD Form-9991 was developed.  

 

Why is this so important to buyers and sellers? 

 

HUD Mortgagee Letter 2019-13 and Form-9991, speak to an SUA ... a Single Unit Approval.  Form-9991 provides Mortgage Lenders the ability to request HUD approval on an individual Condo Unit ... as stated above, something disallowed in the recent past.  

 

For buyers:  The revisions made possible via HUD Form-9991 and approval via the Single Unit Approval Process will enable FHA insurance of individual Condo units, even if the condominium project as a whole does not have a current FHA approval.  (The property must, however, fall within the requirements stated by FHA/HUD.) 

 

For Sellers:  Sellers may find the incentive they need to attract new condo buyers, that otherwise may have been shut out of buying with FHA Financing.

 

Another positive feature of HUD Form-9991 is:

  • Revisions will also provide additional flexibility in ratios, specifically the ratio of Investors to Owner-Occupants.  
  • This will allow for the possibility of FHA financing in more Condo buildings.    


HUD/FHA has now realized that just because a Condominium Association had not completed the tasks required to get an Approval for the entire complex, did not mean that making a loan (or insuring a loan) on select/qualifying units, was a risky proposition.  

 

With the completion and submission to FHA of a fact-finding form (FHA Condominium Loan Level/ U.S. Department of Housing Single-Unit Approval and Urban Development Questionnaire), a Lender will then acknowledge that FHA has approved the single-unit approval process with issuance of an FHA Case Number. 

 

This procedure (completed by the Mortgage Lender) is known as the Case Number Assignment Process.  Upon its completion and issuance, an Appraisal can then be ordered and the mortgage loan processed for Loan Approval.

 

Having recently closed multiple loans utilizing this process, we have learned that this new process and system can work and prove very beneficial to my home buyers.  

 

It's been a great way for my entry-level buyers to become Condo owners.  This has been accomplished without Mortgage Lenders ... or FHA/HUD ... taking additional or unnecessary risks.  Ultimately that positively influences future actions by both. 

 

It's easy to start this condo-buying financing process.  As your Chicagoland - IL/WI Mortgage Originator, I can help.  

 

Via a brief fact-finding conversation, I will gain the important information needed to understand the Condo Association's make-up and financial standing.  This will help start the process to successfully put your transaction and its financing together ... a transaction that prior to the passing of Hud Form-9991 might have been impossible.  It may also enhance and broaden the housing that can be considered during your home search.  

 

If you, or your real estate professional, have questions ... reach out to me at www.genemundt.comgmundt@goapmc.com,  or 815.524.2280.

 

 

*  Are you dreaming of buying or refinancing a home or Investment Property in New Lenox - Will County - Chicago - Chicagoland - IL/WI?

Contact me today! I'll put my 40 years of mortgage experience and expertise to work on your behalf.
I'm easily found at:

 

Gene Mundt
 
Mortgage Originator - NMLS #216987 - IL Lic. 031.0006220 - WI License #216987
 
American Portfolio Mortgage Corp.
 
NMLS #175656
 
 
Direct:  815.524.2280
Cell:  708.921.6331
eFax:  815.524.2281
 
 
 
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Gene Mundt

 Mortgage Originator  -  NMLS #216987    

                                 IL Lic. #031.0006220  -  WI License #216987                                                                                                    

NMLS #175656

 

Gene Mundt, Mortgage Originator,  40+ years of #mortgage experience, will offer you exemplary mortgage service and advice when seeking:  #Conventional, #FHA, #VA, #Jumbo, #USDA, and Portfolio Loans in #Chicago and the greater Chicagoland region, including:  The #Lincoln-Way Area, #Will County, (#New Lenox, #Frankfort, #Mokena, #Manhattan, #Joliet, #Shorewood, #Crest Hill, #Plainfield, #Bolingbrook, #Romeoville, #Naperville, #Wilmington, #Peotone, etc.), #DuPage County, the City of Chicago, #Cook County, and elsewhere within IL and Wisconsin. 

 

Your Referrals & Testimonials are Always Greatly Appreciated! 

 

 

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Topic:
Home Buying
Location:
Illinois Will County New Lenox
Groups:
Realtors®
Mortgages
Chicagoland and Northern Illinois Real Estate
Advice for Buyers
Bananatude
Tags:
condominiums
firsttime homebuyers
downsizing
condo buying
hud
fha changes
condominium financing
fha condo financing
mortgages and lending changes
fhaapproved condo
condominiums vs townhomes

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Ambassador
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George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Gene, bring back the FHA Spot Approval is huge even though it is limited.  Hopefully FHA will expand on it this year.

Jan 21, 2020 01:57 PM #1
Rainmaker
4,675,556
Ron and Alexandra Seigel
Napa Consultants - Carpinteria, CA
Luxury Real Estate Branding, Marketing & Strategy

Gene,

I am very appreciative of your sharing this informationg with us.  I hope this new step in the right direction benefits with lots of business.  A

Jan 21, 2020 03:04 PM #2
Rainmaker
3,506,203
Michael Jacobs
Pasadena, CA
Los Angeles Pasadena 818.516.4393

Hello Gene - I remember something called "spot approval" (or something similar in the past). Anything that can encourage qualified tenants to become property owners could be a win-win for California real estate if inventory lightened up in the opening pricepoints.  It will be interesting. 

Jan 21, 2020 03:52 PM #3
Rainmaker
184,391
Eva B. Liland Century 21 Doug Anderson
Century 21 Doug Anderson - Lancaster, CA
Glad to be of Service 661-714-1643

I appreciate this post Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi , consider buying a condo myself in early 2022. First I was thinking buying a mobile home (live in one now and loving it) but the area I'm planning to move to, even mobile homes are too expensive. Better to buy a condo to stop paying space rent and gain some equity instead.

Jan 21, 2020 05:18 PM #4
Rainmaker
2,513,808
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

This subject and the post author will give hope to the many thank you

Jan 21, 2020 05:21 PM #5
Rainmaker
2,812,843
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

Beautiful transactions indeed and many more to come in the coming year for you and yours hopefully, Gene!

Jan 21, 2020 07:24 PM #6
Rainmaker
764,758
Ritu Desai
Samson Properties - Ashburn, VA
Virginia Realtor-Fairfax/Loudoun/PW-703-625-4949

Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi  any idea how long it takes for FHA to approve? 

Jan 22, 2020 04:15 AM #7
Rainmaker
3,313,746
Nina Hollander
Coldwell Banker Residential Brokerage - Charlotte, NC
Your Charlotte/Ballantyne/Waxhaw/Fort Mill Realtor

Good morning, Gene... another stellar post on news in the mortage industry and this is a change I can totally support! The only problem is that while it might be easier to buy a condo, it's harder than ever to find one for sale!

Jan 22, 2020 05:25 AM #8
Rainmaker
184,391
Eva B. Liland Century 21 Doug Anderson
Century 21 Doug Anderson - Lancaster, CA
Glad to be of Service 661-714-1643

Gene, after reading Nina Hollander 's reply, I suddenly remember back then, 1982, I bought a condo in Tensta, Stockholm, Sweden. And guess what, it had a separate entrance door to a studio and a shower, no kitchen, joined together by two separate hallways. It was a perfect setup and I rented it out!

A few developers should concentrate on today's reality and build some condo complexes with guest studios and add a kitchenette  to make them sell like hotcakes.

Jan 22, 2020 06:18 AM #9
Rainmaker
1,056,071
Steve Loynd
Alpine Lakes Real Estate Inc., - Lincoln, NH
800-926-5653, White Mountains NH

A significant amount of my yearly transactions come Via the condo Market, the new guidelines are a realy game changer for many of my buyers. Thanks for your great info... and attention to these details.

Steve

Jan 22, 2020 05:53 PM #10
Ambassador
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Kathy Streib
Room Service Home Staging - Delray Beach, FL
Home Stager - Palm Beach County,FL -561-914-6224

Gene- you always do such an excellent job of sharing useful information with all of us. You explain it well too. 

Jan 22, 2020 07:47 PM #11
Rainer
230,042
Greg Mona
Revelation Real Estate - Chandler, AZ
Professional Real Estate Representation for YOU!

Thank you for the very informative post, Gene. Anytime there is a measure to level the playing field for those who may have a few more financial challenges than the typical consumer, in this case housing, I’m all for it. Looking at our current local market, with a scarcity of units for sale, at or near all time high pricing, bidding wars, and all cash deals, it s tough for an FHA buyer to come out on top. This is for now, anyway, as we all know the market is cyclical.

Jan 23, 2020 07:00 AM #12
Rainmaker
482,966
Bruce Hicks
Best Homes Hawaii - Honolulu, HI
Your Lifetime Friend/Helper!

fantastic Artice Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi .  The condo market in Hawaii is really active because SFR's are in the 850k+ Range.  We have a fixer upper basic 3/2 listed at $725k and have an offer pending on it!

Jan 23, 2020 01:54 PM #13
Rainmaker
993,880
Jan Green
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

Such a great post that I had to share on Linkedin. Your explain it perfecty for anyone looking to buy a condo using FHA financing!

Jan 23, 2020 03:33 PM #14
Ambassador
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Jeff Dowler, CRS
eXp Realty of California - Carlsbad, CA
The Southern California Relocation Dude

Hi Gene:

This is such great information, and good news for certain buyers.

I sold a listing at the end of the 2019 to an FHA first time home buyer, and there was no formal FHA approval on the complex.

Jeff

Jan 23, 2020 04:24 PM #15
Rainer
319,174
AndreaBFerreira CRS - SRS - CLHMS
Keyes Co. - Davie, FL
Miami Dade, Broward and Palm Beach County in FL

Thank you for sharing, good to be in alert with these hews

Jan 24, 2020 06:01 AM #16
Rainmaker
492,828
Diana Dahlberg
1 Month Realty - Pleasant Prairie, WI
Real Estate in Kenosha, WI since 1994 262-308-3563

I appreciate you sharing all this good information ... the condo market in my area is slim pickings ... but I am seeing more and more building happening here and a number of the areas are condominium complexes.  

I believe the new laws are going to help us (buyers and sellers) see more sales!  

Jan 24, 2020 05:50 PM #17
Rainmaker
197,273
Ben Yost - 303-587-4297
First Time Home Buyer, Mortgage Rates, Pre-Approval - Denver, CO
FHA, VA, Conventional - Mortgage Loans in De

I hate to be debbie downer, but these approvals are not like the old spot approvals. They require money up front; lots of help from the HOA companies and and can take 2-4 months for the approval....... Tried to do 3 FHA spot approvals (I do lots of Non- warrantable condos in CO) - seller got tired of waiting and sold them conventional. Still can't find anyone in CO who has been able to get one closed. Maybe your area is different..... If so would love to know the secret.

Jan 25, 2020 08:31 AM #18
Rainmaker
1,250,453
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi
NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 - New Lenox, IL
708.921.6331 - 40+ yrs experience

Not a Debbie Downer, Ben Yost - 303-587-4297 ... just stating the realities of your housing market, which is most-likely quite different from mine in the Chicagoland area.  No magic to it.  Much depends on the health of the association .... and the true nature of your area's "condos".  Again, I'm thinking you run into some scenarios that I do not. 

Gene

Jan 25, 2020 08:49 AM #19
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Rainmaker
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