Recently, HUD released Mortgagee Letter 2011-03, which extends the temporary guidance for condominium rules through June 30, 2011. These temporary guidance changes increase the chances for a condo development to be approved.
Mortgagee Letter 2011-03 extends and clarifies temporary guidance announced in Mortgagee Letter 2009-46 A. The temporary guidance:
- Increases Federal Housing Administration (FHA) concentration requirements to 50 percent,
- Requires 50 percent of units in a project to be owner-occupied but vacant and REO property are not considered in the calculation of the owner-occupancy percentage,
- Reduces the pre-sale requirement to 30 percent,
- All projects in Florida are required to be reviewed under the HUD Review and Approval Process (HRAP), and
- The Spot Loan Approval Process was eliminated on February 1, 2010, for all FHA case number assignments on or after February 1, 2010 and is not extended.
The temporary guidance is effective for all FHA case numbers assigned through June 30, 2011, excluding spot loans.
As the number of REO condo units increases, vacant and REO units may adversly affect condo developments ability to meet the owner- occupied percentage. This change alone, may keep more develpments on the list for FHA financed loans. That could translate to more homes being sold in condo developments as many Buyers utilitze FHA loans which require only 3.5% downpayment for property purchases.
Looking to Buy or Sell?
Call Clara 856-264-1058
