“Lender Tu” had this to say about recent lending changes concerning condo purchases:
As the mortgage industry continues to go through its 2010 metamorphosis, FHA/HUD is leading the way! As promised last year, one of many changes. FHA is following through with their New Condo Review Process. They are removing the Spot Approval process on Condos that are not approved by FHA, but meet traditional occupancy requirements. Further they will be adhering to the current HRAP (Hud Review Approval Process). Which means Condominium Project owners still have the ability to submit the project for FHA approval as long as it meets FHA’s requirements.
New is the DEL-RAP (Delegated Lending Review Approval Process). This added approval process sounds great initially as it gives the endorsing lender or bank underwriting the loan the ability to Approve the Condo Project. Sounds good right? Not really… The lender is still required to obtain all necessary FHA requirements for a traditional Condo Approval. However, the risk now falls on the lenderand by them approving the condo and the loan they take ALL responsibility of that loan when they send it to HUD for insurability. For now, I don’t know too many lenders that want to take on that risk.
HUD added this additional approval piece to mainly ease up their Condominium project back log as they could not keep up with demand for Condo project approvals. So in essence if a lender is confident and excited about a condo project and eager to close on a unit… the lender can take it upon themselves to approve the project. Which could certainly streamline the process… a word of caution, not every lender will feel confident about doing this. With all new regulations and opportunities. I would give this new process some time to settle out in the coming months and years. And as more lenders become comfortable with the concept, they will begin taking the initiative.
In the mean time, I would concentrate on looking at condos currently approved and meet occupancy requirements to obtain your FHA loan. Happy Hunting! Tu Phan, President of Premier Mortgage (503) 496-0531 tu@premgi.com
