Now that April is Here! ... Watch out with the Condo Scene?

New FHA regulations change condo financing....

FHA recently implemented some new requirements for condominium financing and some Pennsylvania REALTORS® have noticed the difference. Darlene Shannon, a representative with the Federal Housing Administration (FHA), said spot loans were previously given in projects that did not have FHA project approval. “The spot loan approval process as defined in 1996 is gone as of February 1. The DELRAP (lender approvals) and HRAP (HUD approvals) have been streamlined to allow for uncomplicated condominium project approvals eliminating the need to approve units on a ‘spot loan’ basis,” she said. Condos have to meet eligibility requirements outlined in the Housing and Urban Development (HUD) Mortgagee Letter issued in November. Some of the new requirements include:

•Minimum of two or more units

•No more than 25 percent of the property’s total floor space can be used for commercial purposes

•No more than 15 percent of the total units can be more than 30 days past due in the association fees

•At least 50 percent of the total units must be sold prior to an endorsement of a mortgage

•Homeowners’ association budget must have adequate cash reserves.

Source: PARJustListed; 3/30/10


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