December 4, 2015
The FHA and HUD eased certain condo guidelines earlier this year, and have since added a second round of temporarily eased “approval provisions” for condo projects to be added to the FHA approved list for single family home loans.
According to an FHA mortgagee letter, both rounds of these temporarily eased guidelines are designed to help more people get into FHA condo loans.
According to Mortgagee Letter 2015-27, “It is anticipated that the issuance of these additional temporary provisions will increase the pool of condominium projects eligible for FHA approval, thus increasing affordable housing options for first-time and low to moderate income homebuyers. The requirements of this Mortgagee Letter are applicable to all Title II programs including the Home Equity Conversion Mortgage (HECM) insurance program, unless otherwise stated.”
One area where these eased restrictions are important is something known as the owner/occupancy percentage.
“The procedure for calculating the required owner-occupancy percentage is modified to allow units that are not investor-owned to be considered owner occupied for the purpose of Condominium Project approval.”
The mortgagee letter states that for the purposes of condo unit approval, a condo project unit is considered to be investor-owned if it meets the following criteria:
–Tenant Occupied;
–Vacant and listed for rent;
–Existing (previously occupied), vacant and listed for sale;
or
–Under contract to a purchaser that does not intend to occupy the unit as a Principal Residence or Secondary Residence.
The mortgagee letter adds, “For purposes of calculating the owner-occupancy percentage:
–on multi- phased projects, the owner-occupancy percentage is calculated on the total number of units in the first declared phase and cumulatively on subsequent phases; or
–for single-phase condominium project approval requests, all units are used in the denominator when calculating the required owner-occupancy percentage.”
There must be documentation for all units presented as “owner-occupied”.
We’ll cover additional details of this FHA mortgagee letter in a future blog post.
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http://www.fha.com/fha_loan_limits_widget
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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