Important Notice - FHA Financing for Condos

As you conduct your daily business, we want you to be aware of all issues that could impact your clients and your business. One such issue is the recertification of condominiums for FHA financing. Many associations that did not meet the December 2010 deadline were granted extensions. According to FHA, the extensions were granted to reduce the impact of processing and reviewing the number of project approvals expiring at the same time while recognizing current housing market conditions.

We are providing the following information in the event you encounter a situation in which your client has FHA financing and would like to purchase a condo.

The U.S. Department of Housing & Urban Development has two processes available for condominium projects to make them eligible for FHA financing:

• The HUD Review and Approval Process (HRAP)
• The Direct Endorsement Lender Review and Approval Process (DELRAP).

Click here for a list of all the submittal requirements.

There are eligibility requirements may limit the number of projects which can be considered for FHA financing. For example, no more than 15% of the units can be in arrears (more than 30 days past due) of their HOA dues and at least 50% of the units must be owner occupied. A complete list of eligibility requirements is available by clicking here.

Quick Facts:

• There is no HUD fee for either HRAP or DELRAP review and approval. However, Homeowners Associations which contract with a management company or attorney to compile the necessary documents may incur a fee for those services.
• If a lender prepares the necessary documents and is able to obtain spot approval for FHA financing, that approval will cover the entire project, and subsequent listings in the project will not require separate approval.
• The HUD certification lasts for two years and the approval process will take approximately 30 days if all of the necessary documents are provided at the time the application is submitted.

If you are the agent on a condominium unit or representing a prospective buyer interested in condominiums, you can click here to view HUD’s list of approved condos and search for your project by city and zip code to determine its status.