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| feet on front stoop of sold house |
New guidelines
effective October 15, 2019, make condominium financing more accessible for FHA
borrowers. Previously, to finance a condominium unit with an FHA loan the
condo project had to meet approval requirements. With the new policy,
individual condo units that are not part of an FHA-approved condo project may
be eligible for FHA financing. The policy change is a response to the
need for more affordable options for first-time home buyers in today’s
competitive market.
“Today we are making certain FHA
responds to what the market is telling us. This new rule allows FHA to meet its
core mission to support eligible borrowers who are ready for homeownership and
are most likely to enter the market with the purchase of a condominium,” said
HUD Acting Deputy Secretary and FHA Commissioner Brian Montgomery.
Department of Housing and
Urban Development’s released on Wednesday:
"FHA's new condominium policy is
part of a broader Administration objective to reduce regulatory barriers that
currently restrict affordable home ownership opportunities. FHA's new rule:
Introduces a new single-unit
approval process to make it easier for individual condominium units to be
eligible for FHA-insured financing;
Extends the re-certification
requirement for approved condominium projects from two to three years; thus
saving time and money."
Many first-time home buyers choose
to purchase a condominium because they tend to be priced lower, and thus have a
lower down payment than detached single-family homes. They are low
maintenance in terms of landscaping and exterior needs, many include community
amenities like a gym or pool, and depending on the Homeowner’s Association
(HOA) they could be a good investment property to rent out if the homeowner
chooses to move to a larger home.
Only six and half percent of
one hundred and fifty thousand condominium developments in the United States
were previously eligible for FHA-backed mortgages. It is expected that
sixty thousand more complexes will fit into the new FHA guidelines. Many complexes
due to lawsuits, lack of reserves, and health and safety violations became
frozen to sell to first time home buyers who often use FHA products which allow
low down payments. In the past sellers had to resort to hard money loans or
higher interest rate niche products to sell or refinance their unit.
Lets’ talk
about the complex where you have a listing
and see if the unit is now
more
desirable to first time buyers
or those who want to use an FHA mortgage.
(949) 784- 9699
C G
NMLS 324982
This is not a commitment to lend.
Equal Housing Opportunity.
2. Explanation of Materials Transmitted:
This update to the FHA Single Family Housing Policy Handbook, or Handbook 4000.1
(Handbook), is to incorporate guidance for FHA Condominium Project Approval.
The following new sections have been added to the Handbook:
• Section II.A.8.p Condominiums
• Section II.C Condominium Project Approval
Existing content in the following sections has been updated to incorporate Condominium Project
Approval guidance:
• I.A.5 Doing Business with FHA –Supplemental Mortgagee Authorities
• II.A Origination Through Post-Closing/Endorsement – Title II Insured Housing Programs
Forward Mortgages
• V Quality Control, Oversight and Compliance
Below is a list of content updates being made to the Handbook:
Handbook Section Handbook Changes Page Number(s)
Section I – Doing Business with FHA
I.A.5.e Title II Direct
Endorsement Lender
Condominium Project Review
and Approval Process
Authority
Added new section that defines
the scope of authority,
eligibility requirements,
application and approval
process, and post-approval
requirements to obtain
Conditional and Unconditional
DELRAP Authority.
37-41
Section II – Origination through Post-Closing/Endorsement
II.A.1.b.iv(B)(4)(b) Property
Eligibility and Acceptability
Criteria – Site Condominiums
Updated definition to align
with new Site Condominium
definition.
154
II.A.8.p Condominiums Added new Condominium
section that includes
requirements for: Units Not
Requiring Approval; Units in
Approved Condominium
Projects; Single-Unit
Approval; and Site
Condominiums.
477-496
3
Handbook Section Handbook Changes Page Number(s)
II.C Condominium Project
Approval
Added new Condominium
Project Approval section with
updated eligibility
requirements to obtain FHA
Condominium Project
Approval and the Project
Approval Submission process
for HRAP and DELRAP.
510-537
II.D.6.a Condominium Projects
– Definition;
II.D.6.d.i Site Condominium –
Definition
Updated definitions to align
with new Condominium
Project, Common Elements,
and Site Condominium
definitions.
590
Section V – Quality Control, Oversight and Compliance
V.A.1.b.iii Loan Administration Updated the definition of Loan
Administration to include
Condominium Project
Approval.
969
V.A.2.a.i Who May Perform
Quality Control – Employees
Updated policy to require
DELRAP staff who perform
Quality Control (QC)
Functions to be independent of
the Condominium Project
Approval processes.
971
V.A.3.d.i Quality Control
Reviews of Specialized
Mortgage Programs – Standard
Updated guidance to include
Condominiums and
Condominium Project
Approvals.
987
V.C.2.d DELRAP Mortgagee
Monitoring Reviews
Updated guidance to require
that the DELRAP Mortgagee
provide FHA with all
information and documents
requested during reviews to
determine compliance, identify
the potential scope of review,
and indicate how findings will
be communicated.
997
4
Handbook Section Handbook Changes Page Number(s)
V.E.3.a.v Return to Conditional
or Withdrawal of Unconditional
DELRAP Authority
Updated guidance to include
the adverse actions the
DELRAP Mortgagee is subject
to if DE Authority is lost or if
the DELRAP Mortgagee does
not comply with
Condominium Project
Approval Requirements.
1009-1010
Handbook Section Handbook Changes Page Number(s)
Throughout Document
Various technical edits
including hyperlinks,
punctuation, formatting,
grammar, spelling, and
capitalization.
148, 152, 154, 166,
168, 183, 253, 328,
331, 362, 364, 366,
371, 404, 538, 544,
545, 555, 586, 591,
620, 623, 705, 722,
734, 757, 758, 766,
772, 890, 920, 975,
979
3. Implementation
The Handbook will be effective 60 days after the final “Condominium Project Approval Rule” is
published in the Federal Register. Handbook changes in Section II.A.8.p Condominiums are
effective for case numbers assigned on or after October 15, 2019. Handbook changes in Sections
II.C Condominium Project Approval are effective for Condominium Project Approvals and
Recertifications on or after October 15, 2019.
4. Superseded Policy:
Previous versions of Handbook 4000.1 are amended as described in this Transmittal. All previously
superseded or canceled Mortgagee Letters, Housing Notices, and/or Handbooks remain canceled or
superseded, except for items notated by * below. All superseded or canceled policy documents will
continue to be available for informational purposes only on HUD’s website. Policy documents that
have been superseded in full by the Handbook can always be found on HUD’s Client Information
Policy Systems (HUDCLIPS) web pages, accessible from the Single Family Housing Superseded
Policy Documents page at
http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/hudclips/sfhsuperseded.
Mortgagee Letter(s) Superseded in Whole ML Number
Extension of Temporary Approval Provisions for the Federal Housing
Administration (FHA) Condominium Project Approval Process
2017-13
5
Mortgagee Letter(s) Superseded in Whole ML Number
Federal Housing Administration (FHA) Condominium Project Approval –
Owner Occupancy Requirement
2016-15
Extension of Temporary Approval Provisions for the Federal Housing
Administration (FHA) Condominium Project Approval Process
2016-13
Additional Temporary Approval Provisions for Federal Housing
Administration (FHA) Condominium Project Approval with Att-1 FHA
Condominium Recertification Checklist
2015-27
Extension of Temporary Approval Provisions for the Federal Housing
Administration (FHA) Condominium Project Approval Process
2014-17
Temporary Approval Provisions for the Federal Housing Administration
(FHA) Condominium Project Approval Process
2012-18
Housing Notice(s) Superseded Document
Number
Extension of Temporary Approval Provisions for the Federal Housing
Administration (FHA) Condominium Project Approval Process H 2014-11
Waiver(s) Not Superseded ML Number
Partial Waiver of Mortgagee Letter 2011-22, Attachment 1: Condominium
Project Approval and Processing Guide, Section 2.1.9 (2/7/2018)
2011-22
Mortgagee Letter(s) Superseded in Part ML Number
The following Mortgagee Letter remain effective for the sections noted.
Sections: 1.8.7 Affordable Housing; 1.8.8 Deed Restrictions; and 1.8.9
Restrictions on Leasing in Mortgagee Letter 2011-22 Condominium Approval
Process for Single Family Housing – Consolidation and Update of Approval
Requirements remain effective for Condominium Project Approvals, LoanLevel Approvals, and Single-Unit Approvals until a final rule superseding the
guidance is issued.
2011-22
Section:1.8.7
Section:1.8.8
Section:1.8.9
5. Paperwork Reduction Act:
The information collection requirements contained in this document have been approved by the
Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C.
3501-3520) and assigned OMB control numbers 2502-0005; 2502-0059; 2502-0117; 2502-0189;
2502-0302; 2502-0306; 2502-0322; 2502-0358; 2502-0404; 2502-0414; 2502-0429; 2502-0494;
2502-0496; 2502-0525; 2502-0527; 2502-0538; 2502-0540; 2502-0556; 2502-0561; 2502-0566;
2502-0569; 2502-0570; 2502-0583; 2502-0584; 2502-0589; 2502-0595, 2502-0600 and 2502-0610.
6
In accordance with the Paperwork Reduction Act, HUD may not conduct or sponsor, and a person
is not required to respond to, a collection of information unless the collection displays a currently
valid OMB control number.
FHA Single Family Housing Policy Handbook
Table of Contents
Handbook 4000.1 i
Effective Date: 09/14/2015 | Last Revised: 08/14/2019
*Refer to the online version of SF Handbook 4000.1 for specific sections’ effective dates
FHA Single Family Housing Policy Handbook
