FINANCING CHANGES IN 2010 – IT’S NOT ALL BAD NEWS!

There have been some changes in FHA guidelines for condominium projects. Here is some great data from Mike Howshar at Landover Mortgage.

CHANGES IN EFFECT NOW

— Detached (site) condos do not require FHA project approval. (Good news!)

— Two-unit projects are now eligible. (Good news!)

— Owner-occupancy requirements for approved projects are reduced from 51% to 50%. (Good news!)

— FHA is honoring any current project certification until December 7, 2010. After 12/7/10, any project approved PRIOR to 10/1/08 will have to be recertified. Condo projects approved AFTER 10/1/08 will be subject to recertification 2 years after the date they were added to the list. This is important for Homeowner Associations/Management Companies to remember as FHA is such an important part of lending in this marketplace that without this it will severely damper an owner’s ability to sell for top dollar.

You can search for condo project certification at:

I usually only complete the zip code field and pull records for all condos in that area. In this particular instance less seems to be more.

CHANGES COMING VERY SOON

— FHA “Spot” approvals will no longer be allowed after January 31, 2010. If you are a buyer considering a purchase in a project that is not approved, it is the time to do so now rather than later. The purchase does not have to close by 1/31/10, but the buyer and property must be registered with FHA and have a case number assigned.

Also, the U.S. Department of Housing and Urban Development (HUD) announced today that they will be increasing the cost of the upfront mortgage insurance premium which buyers pay at close. It is currently 1.75% of the loan amount. This is usually financed back into the loan. The new cost is expected to be 2.25%, and will go into effect “in the spring”, according to the HUD website. More information will be released soon.

— Allowed seller concessions (seller paid closing costs, etc) are being reduced from 6% to 3%. This is expected to go into effect “in the early summer” according to the HUD website: