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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
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
