Monday, September 14, 2009

New FHA Condo Approval Guidelines

FHA has recently released a Mortgagee Letter that will change how condominium projects are approved for FHA financing. HUD will eliminate spot approvals and the current FHA Approved Condo List on all case numbers issued on or after October 1. FHA will now allow lenders to determine project eligibility, review documentation and certify that it is compliant to HUD's guidelines and regulations. There will be two condominium project approval options. The documentation requirements will be the same for each option. The first option is a HUD Review and Approval Process option referred to as HRAP (probably will be longer and more costly). The second option will be Direct Endorsement Lender Review Process referred to as DELRAP. This option is restricted to lenders who have unconditional Direct Endorsement authority and staff with knowledge and expertise in reviewing and approving condominium projects. It's too early to tell how these changes will affect FHA condominium financing. Lenders are currently scrambling to figure out how they will deal with the additional liability of certifying these projects with all the current condominium challenges and exposure. For more information on financing a home please contact Eric Intihar of US Mortgage of Florida at Eric@SpecialtyMortgage.com