FHA Update – Provisions for Condo Project Approval Process
In order to address current housing market conditions, HUD has published Mortgagee Letter 2012-18, which highlights important changes to the current condominium guides.
Here are the 7 things you need to know about these changes
1. These changes are in effect from September 13, 2012, until August 31, 2014, unless extended.
2. Under construction is defined as (1) a new development in which construction has been started but is not yet completed or in which units are completed but are less than 1 year old (existing < 12 months old); or (2) gut rehabilitation conversions. The definition of “under construction” applies to legally phased developments.
3. For newly converted condominium conversions, at least 50 percent of the total units in the project must have been conveyed or be under a bona fide contract for purchase to owner-occupant principal residence purchasers.
4. A developer may own up to 50 percent of the total units at the time of project approval.
5. No more than 15 percent of the total units can be in arrears (more than 60 days past due) on their condominium association fee payments. This does not include late fees or other administrative expenses. The 15 percent includes all units (occupied, investor, bank owned and vacant). There will be no exception requests granted.
6. Unoccupied and unsold units owned by a builder/developer are not considered as investor-owned and subject to the requirements unless the unit is currently rented or has previously been occupied.
7. For Proposed, Under Construction (including existing < 12 months old) or Gut Rehab Conversions, FHA will allow a minimum owner-occupancy percentage equal to 30 percent of the declared units. Legally phased projects must meet 30 percent presale and 30 percent owner occupancy requirements.
Click here to read the full 12-page Mortgagee Letter in its entirety.
If you would like to apply for a Mortgage Loan, you can APPLY ONLINE HERE, you can call John Thomas at 302-703-0727.
John R. Thomas – NMLS 38783
Certified Mortgage Planner – Primary Residential Mortgage, Inc.
302-703-0727 DE Office / 610-906-3109 PA Office / 410-412-3319 MD Office
248 E Chestnut Hill Rd, Newark, DE 19713