FHA – Arrives With a Vengeance – Good or Bad? Maybe Both.

This Affects Condo’s Only!
Although there is a lot of discussion and further changes are expected FHA has drastically altered the condo approval guidelines.

As of Feb. 1st, 2010 all condo projects must be FHA approved and the list of approved projects can be viewed on HUD’s website.

The Bad Part?
If a condo is not FHA approved already:

  • The Association/developer can apply directly for HUD approval for free (lead time is anywhere from 6-12 weeks).
  • A number of banks and organizations will help push project approvals for new construction and larger developments at a cost from $750 – $3,000.

The Good Part?
Once any unit in the project receives FHA Approval, the entire project is approved. This is great news for the long term, but not so great for the short term.

Navigating the New Rules…
Truthfully the new RESPA violation is a huge change and has caused quite a stir, however it is here and we need to learn how to abide and streamline the new laws. It has been a tremendous month of learning but there are a few simple things to do that will uncomplicate the entire process.

Really there is nothing additional to do, but it essential to work with and create a team of trusted professionals when considering a home purchase. This means all persons involved:

  • Mortgage Banker
  • Realtor
  • Attorney
  • Inspector

These people directly affect your sanity in the home purchase process. It is and still should be an enjoyable time for you, no matter who you choose, make sure it is a trustworthy referral.

There are a few ideas to help streamline this process and keep it stress free! (As much as we can)

  • Pre-Approvals: no matter who the lender is, get specifics. Some questions to ask: (These go for both realtors and borrowers too!)
  1. Has credit been actually pulled?
  2. Has a Fannie MAE, Freddie MAC, or FHA approval been run?
  3. What building restrictions exist for condos?
  4. If FHA, ask for help in identifying buildings, the HUD website is great, but once the individual building approvals begin, due diligence is necessary.
  5. Do we need to know anything else regarding the conditions of this pre-approval?
  • Contracts:
  1. Should have all parties involved contact information, this way I can immediately call and introduce myself and begin working as a team.
  2. Wording the contract is now as important as ever, I can help with that.
  3. Loans can still close within 30 days if needed.
  4. Contract changes: including price changes, credits, closing dates, all have to be addressed early to avoid delayed closings.
  • Communication:
  1. The lender must act as a liaison between all parties involved in the transaction
  2. It is now full disclosure, the relationships with attorneys is an absolute must to ensure a streamlined process.
  3. I keep everyone apprised of the loan progress, and am readily available to answer any questions.

Hopefully this helps a bit, it is going to be a fantastic spring market, please feel free to call or email me with any questions or concerns!

Article reprinted with permission from Erin Griffin, MBA, Vice President, Corby Mortgage.

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