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Put FHA Condos Back in Your Playbook!

October 15, 2019 Announcements

Put FHA Condos Back in Your Playbook!

Featuring New FHA Single Unit Approval (SUA) Expansion

Effective for Case Number Assignments Dated on or after October 15, 2019

The Legacy “Spot Condo” is Now Single Unit Approval

Effective for case number assignments on or after October 15th, 2019, FHA borrowers may obtain Single Unit Approval (SUA) on non-FHA approved condominium properties that meet eligibility requirements (detailed below).

A Significant First-Time Buyer Opportunity!

  • As a result of FHA's new policy, it is estimated that 20,000 to 60,000 condominium units could become eligible for FHA-insured financing annually.
  • Condo projects that are not currently on FHA’s list of approved condos may be eligible for an FHA Single Unit Approval.

  • Target opportunities include previously approved projects that are now expired or were never approved.

FHA Single Unit Condo Eligibility (see AllRegs for all requirements)

  • At least five units

  • 10 or more units, up to 10% may be FHA-Insured

  • Less than 10 units, up to two FHA-Insured units

  • At least 50% owner-occupancy

  • HOA Budget 10% reserve requirement
    (or amount supported by reserve study)

  • Applications must receive an Accept from TOTAL Mortgage Scorecard or have a maximum 90% LTV for an Accept Risk Classification requiring a downgrade to Manual Underwriting.

  • Maximum of 35% commercial space

  • Maximum 10% individual ownership

  • Has a Certificate of Occupancy that was issued at least one year ago or has been occupied

  • Manufactured homes, gut rehab or new construction is not eligible

  • No more than 15% of units are 60 days delinquent
    in HOA dues

  • Not located in an approved condominium project or unapproved phase of a condominium project with an approved Legal Phase

The Fast & Easy Review Process

  1. Identify condo unit that meets general SUA eligibility (complete the New SUA Submission Form/Eligibility Checklist)

  2. Upload underwriting submission with New SUA Submission Form/Eligibility Checklist

  3. For Brokers > Loan Setup will order case # and validate SUA eligibility with HUD (requires about 3 days).
    For Wholesale Correspondents > Follow the new SUA Case # Request Procedure.

  4. Upon Loan Setup completion, Project Review Desk begins review.
    - Project Review Desk review includes documentation collection from Client and HOA.
    - If Client has all/most documentation**, review timeline is about 1-3 days.
    - If Project Review Desk collects all documentation, review timeline  is about 8-10 days
    .

     

Additional Enhancements and Updates

  • Enhancement - More FHA Eligible Projects!  Freedom Mortgage will accept condo projects approved under the Direct Endorsed Lender Review Process (DELRAP) with other lenders.

  • Enhnacement - HUD has expanded “site condo” eligibility to include ATTACHED townhomes provided the unit owners own the building and land.  Previously, site condos were only detached units but now will include some attached townhome units. Site condos do not require a condo project review.

  • Update - Per HUD, the HRAP Review and Approval Process now requires a new condo questionnaire.

 

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