Thursday, December 9, 2010

FHA Gives Condo Lending Market Reprieve

As reported by and  Mortgage News Daily this morning at 9 am, FHA announced a Condo Project Approval extension after the article Condominium Financing Markets Lose Government Insured Lending Supports was published to this blog and set for 7:30am release.  HUD held an "industry call with Gary Long and his partner in the condominium policy department in Washington DC and revealed numerous facts about FHA's condo program through the years, as well as the implications of the new project approval changes.  

Condo Projects will have a staggered expiration based on when they were approved starting at year end and proceeding through September 30th, 2011.    
FHA condos extensions are by year approved.  Projects approved with number of affected projects in parenthesis:

1972-1980 (403) and 1981-1985 (1800) expire 12/31/2010
1986-1990 (7800) expire 5/31/2011
1991-1995 (5700) expire 7/31/2011
1996-2000 (3800) expire 8/31/2011
2001-2005 (2000) expire 9/30/2011
2006 - Sept. 2008 (1700) expires 3/31/2011

HUD clarified that it will accept loans with an FHA Case Number issued up to and including the expiration dates, which clarified a point of lender concern that approval expiration was date based, not case based.

HUD's new FHA condo lending homepage contains current condo guideline resources including recertification processes which will be handled by a contractor with HUD supervision for the "HRAP" process.  Once a condo has expired, it has 6 months to re-certify.  Afterwards it will have to re-apply from scratch.  Florida condos must use the HRAP process to re-apply directly through HUD.  HUD's goal is to have a 30 day recertification process.

During the call, HUD also announced that the temporary guidance guidelines issued last year is also administratively in the extension approval process.  These guidelines require all Florida condos to go through HUD review and allow certain leniencies as well.  However, re-certifications can be handled by lenders using the DELRAP process if the original review was completed by HUD.

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