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FHA Announces Temporary Condo Waivers Through 2010
FHA has announced temporary waivers for condo financing policies
that took effect on Dec. 7, a development stemming in part from discussions held between NAHB Chairman Joe Robson and FHA Commissioner David Stevens.
These waivers will apply through the end of 2010 to the agency's permanent baseline guidance for condominium project eligibility. Specifically, the exceptions include a temporary decrease in the pre-sale requirement to 30% (from 50% under the new policies) and an increase to 50% (from 30%) in the allowable concentration of condo units financed with FHA-insured mortgages. The FHA concentration can be increased to 100% for existing projects that are complete and meet certain additional requirements. New construction and conversions are not eligible for this higher exception.
At the end of the waiver period, the FHA’s condo requirements will revert back to those announced in Mortgagee Letter 2009-46B, which outlines the criteria that condo projects must meet to receive agency approval and describes the condominium project approval process. Under this policy, the FHA will continue to perform project reviews. Alternatively, lenders that receive the FHA’s okay may also grant project approvals, although by doing so they assume some risks. Projects located in Florida are not eligible for lender review at the present time. Meanwhile, in a significant change for owners of existing condos, after Feb.1, 2010, lenders will no longer be able to grant “spot” approvals of FHA-insured loans for potential condominium purchasers who want to purchase units in projects that lack FHA approval.
 For your additional information, the temporary waivers are discussed in Mortgagee Letter 2009-46A and a the FHA has posted a Frequently Asked Questions sheet regarding its condo policy online.
Contact: Bill Renner at 800-368-5242 x8597 for more information.
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