New HUD/FHA Condo Guidelines
December 7 has been set as the date for the new condo review and approval requirements. For cases pulled on and after December 7 the condo project must either be currently approved on the approved condo list at https://entp.hud.gov/idapp/html/condlook.cfm or must be reviewed and approved before the case can close with FHA financing.
HUD offers two approval options: DELRAP and HRAP.
DELRAP stands for Direct Endorsement Lender Review Approval Process and HRAP stands for HUD Review Approval Process. HUD agreed to allow experienced lenders the option of taking on responsibility for reviewing and approving some projects while choosing to submit others directly to HUD for their expertise on others.
1. The project must include no less than two units
2. All projects must be covered by hazard and liability insurance and applicable projects must provide evidence of coverage for flood insurance and fidelity bond insurance when required.
3. For projects whose master insurance policy does not include interior unit coverage, evidence of the borrower’s HO6 coverage must be obtained and provided.
4. Right of first refusal is now deemed acceptable as long as it does not subject any person to discrimination as listed or defined under the Fair Housing Act regulation 24 CFR part 100.
5. No greater than 25% of the total project’s floor space may be used for commercial purposes.
6. No more than 10% of the units can be owned by a single individual or investor.
7. No more than 15% of the unit owners are allowed to be delinquent on their HOA fees.
8. Evidence of a minimum 50% pre-sale must be presented in the form of any of the following:
A direct builder certification requires the builder to sign and certify as to the following:
The undersigned hereby certifies that in lieu of providing (1) Copies of sales agreements and evidence that a mortgagee has issued approval; or (2) Evidence that units have closed and are occupied; the Developer/Builder has attached to the signed and dated certification, a list documenting all units sold, under contract or closed (i.e., and excel spreadsheet). This information will be used to document the required minimum presale requirement of 50 percent.
Title 18 U.S.C. 1014, provides in part that whoever knowingly and willfully makes or uses a document containing any false, fictitious, or fraudulent statement or entry, in any matter in the jurisdiction of any department or agency of the United States, shall be fined not more than $1,000,000 or imprisoned for not more than 30 years or both. In addition, violation of this or others may result in debarment and civil liability for damages suffered by the Department.
9. At least 50% of the units must be occupied by owners or sold to owners who intend to occupy.
10. Projects consisting of three or fewer units must not have more than one unit encumbered by FHA financing.
Projects consisting of four or more units must not have greater than 30% of the total number of units encumbered by FHA.
HUD will be tracking the number of cases assigned in each project and the FHA concentration will be listed within the condo approval data screens at https://entp.hud.gov/idapp/html/condlook.cfm.
11. The homeowners association budget must be reviewed for adequacy to ensure sufficient funds are available to maintain and preserve all amenities and features unique to the condominium project.
Government Moratorum Expiration Forces Jump In Illinois Foreclosures
Not only is the housing crisis far from over in the state of Illinois it may be getting worse. Thank you to the out of state banks lending in this state inconjunction with the state governments meddling in the foreclosure process through moratoriums.
Foreclosure filings jumped 56 percent in October, resulting in the highest monthly total for Illinois since January 2005, according to a new report from RealtyTrac.
Illinois had the third-highest number of foreclosures in the nation last month with 19,946, and was the only state with a foreclosure rate in the top 10 to see an increase in foreclosure activity.
The report cites a recently passed state law that gives homeowners extra time to avoid foreclosure as possibly having created pent-up activity.
Since the law went into effect in April, Illinois foreclosure activity had decreased for three straight months before the October spike.
Nevada, California and Florida posted the highest foreclosure rates in October. Illinois ranked sixth.
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Awaiting FHA's Audit Results
FHA Audit Due Wednesday Morning
11/04/2009 morning the Federal Housing Administration (FHA) will release their mortgage insider anticipated audit of its finances.
The details about how much capital is left in its single family insurance reserve fund which covers losses on its massive amount of covered homes is being awaited. FHA commissioner David Stevens has stated that the government entity and single family home loan insurer won't need tax payor money to weather the recession and housing crisis.
FHA's David Stevens told National Mortgage News last month that the stories of a mismanaged fund are essentially groundless. A spokesman for the agency said it does not anticipate releasing any results that will vary widely from "what we've already signaled."
Recently FHA has tightened its underwriting guidelines and taken administrative action against certain lenders that it believes were abusing and violating its guidelines.
Mortgage Refinancing, Loans, FHA, Mortgage Interest Rates, Mortgage Bankers Association, Mortgage Bankers, Wholesale Mortgage Lending, Mortgage Banking, Mortgage Market Guide, Housing Market, RealestateloanS.com, Housing, Fixed rate mortgage, Fannie Mae, Freddie Mac, HUD, FHA, National Association of Home Builders, Homeownership, Mortgage Professional
