FHA Announces Major Changes to Condo Projects:
Monday, June 22, 2009 at 10:20AM HOT TOPIC: Major changes coming for FHA condo financing effective October 1st 2009. If you, someone you know or a client of yours is planning to purchase a condo and using FHA financing then you will want to read this entry carefully. There were major changes announced by FHA last Thursday, June 18th for the financing of condominiums and I have outlined them below.
1. FHA spot approvals are being discontinued after effective October 1st, 2009. Many lenders will have to deliver their FHA loans to their investor of choice NO LATER THEN October 1st so they may have an effective date which is EARLIER then October 1st. You will want to check with your lender to determine their effective date of this change. If you are a real estate agent with a listing in a condominium complex that is not currently FHA approved, you will want to get the Spot Approval prior to the October 1st cutoff date. If you are a buyer wanting to purchase a condo and the complex is unapproved then you should call my team so that we can get the project and your financing approved prior to FHA’s cutoff date.
2. FHA Direct Endorsed Lenders will be able to spearhead FHA blanket approvals on condominium projects. On the surface this sounds like FHA is loosening up and giving more authority to the lenders, which we are always excited about. BUT, the downside to this is that FHA is going to limit 30% exposure to all projects. This means that NO MORE than 30% of the units in the complex can have FHA financing on them. I see this as becoming a challenge for all us. In most of the FHA approved condominium complexes that we works with, the majority of the units are being financed via FHA loans.
3. Site condominiums that are single detached dwellings encumbered by a declaration of condominium covenants or condominium form of ownership will not require FHA approval. This new rule is in effect immediately. Manufactured homes are not included in this new guideline.
Please check your pipelines to see if you have any FHA buyers looking for condominiums which may be affected by these new guidelines. If you have a condominium that is on the market or coming onto the market then I recommend you check into the FHA approval status of that complex and get the Spot Approval before the October 1st date. There is only limited information available on these pending changes and I will be updating my blog as more information comes available.
On another note, rates are still low, there are many great loan opportunities for home buyers and those who want to refinance. Homes that are clean and priced well are flying off the market. We are seeing multiple offers and, in some cases, homes selling for more than asking price. We are all very happy to see our local market picking up! My team and I are always excited to answer questions and help you in any way possible.
We look forward to working with you and/or your buyers. Call me at (206) 909-3930 or email me at michelle.coolidge@cobaltmortgage.com
Reader Comments (5)
great insight on fha. how about providing some details on the super va loans. thanks again, -brian
Hi Brian. The VA Jumbo loan can be a great opportunity for many vets. I will get all the details together and post it soon. Thanks so much for your comments. Have a successful day!
Hi, Michelle. This is Hugo. I'm locate in South Florida, Broward County. I' am not a real state but i a buyer. I would like to know if you can help or give more information. I applied for a loan and started the process of a 2/2 apartment at Napoli Gardens at Coral Springs Florida. It is FHA. Along with my offer theres another person with a offer but we both received bad news. The bank said we wont get an answer if either is approved and excepted in 2 MONTHS. It's a short-sale but usually short sales goes from 2- weeks to about 6 weeks. 2 months is way over OCT. 1ST.
Should i drop that one and start looking for something new rite away, i think i wont have enough time and i find it very rare and weird this specific property is going to take 2 months just for an answer.
See what can you do for me, what can you help me with or what kind of advice you can give me as good fellow.
Thank You. Appreciate your time in reading my e-mail.
Hi Hugo,
A couple of thoughts.... First, the looming Oct 1st date does not mean that condos will not be able to go on a FHA loan. It just means that FHA's condo approval list is going away. FHA is putting standards in place for the HOA and then turning over the approval process to the lender directly. If you are uncertain that the HOA will meet FHA standards under the changes scheduled to take effect Oct 1st then you should make sure your realtor jumps in to help you with this to get the necessary research done, along with your lender. Another word of advise..... The ratio of short sales that actually close is small compared to bank owned or a traditional seller type of property. Anytime you write an offer on a short sale I believe that you should continue to look at other homes until the bank has accepted your offer. Without the bank's signature you have nothing final. I think you should treat your situation as though you do not have a home tied up yet, because you don't. Hope this helps you. Please feel free to let me know if you have any other questions or if we an help you.
Take Care!
Michelle Coolidge (WA Lic No: 510-LO-51936) | Certified Mortgage Planner - FHA DE Underwriter | Cobalt Mortgage
16400 Southcenter Pkwy #208, Tukwila, WA 98188
O 206.631.2205 | C 206.909.3930 | F 877.900.5102
Blog — www.michellesmortgagemusings.com
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