Category Archives: Condoapprovalsllc.com

FHA Condo Approval

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condoapprovalsllc.comDevelopers seeking FHA condo approval have to put their projects through a complicated series of legal hoops. The Federal Housing Administration (FHA), within the Department of Housing and Urban Development (HUD), has to sign off on condominiums. The homeowner association (HOA) that owns the condo must in turn approve the FHA-sponsored borrower that wants to purchase one of the units. The legal complications on both sides can make this process tedious and drawn-out. FHA-sponsored borrowers who want a condominium unit can search on the FHA’s approved list. By inputting specific information they can easily locate a condominium project in their area.

Two routes exist to obtain FHA condo approval. The developer can submit the project directly to the FHA under HUD Approval and Review Process (HRAP), or he can have the lender approve it under Direct Lender Endorsement Review and Approval Process (DELRAP). HRAP will take more time than DELRAP because the FHA has to process the paperwork, verify that the specified requirements have been met and finally, approve the project. The requirements include restrictions on investor ownership, mandatory minimums the project must meet and insurance coverage stipulations.

No more than 10 percent of the units may be owned by a single investor. Half of the units must be owner-occupied, and the same percentage must have already been sold. Adequate hazard and liability insurance coverage must be present on all units before the FHA will approve the project. The FHA is under a legal mandate from Congress to regulate approved condominium projects for FHA-sponsored borrowers. These legal restrictions and requirements are designed to sift through thousands upon thousands of condominium projects to find ones that meet the FHA’s standards. Borrowers do not have to worry about finding subpar projects when the projects have met the requirements for FHA condo approval.

FHA Condo Approvals

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condo approvalsLiving under the rules and restrictions of a homeowner association (HOA) is comfortable for some but a nightmare for most. Trying to get FHA condo approvals can also be a major headache. HOAs are corporations created by real estate developers. The HOA owns all the property and the developer uses it to build, prepare and sell units, such as in a condominium. The unit owners pay dues to the HOA which manages the property. To increase opportunities for new sales and dues, HOAs seek to expand their pool of eligible borrowers. One of the easiest sources of borrowers are individuals whose mortgages are sponsored by the Federal Housing Administration (FHA).

The FHA, part of the Department of Housing and Urban Development (HUD), insures mortgage loans for borrowers who have legitimate reasons to be unsuccessful in the private credit markets. FHA-sponsored borrowers represent a nice source of new cash to HOAs. Issues arise when the HOA must deal with the FHA because it has to approve the would-be owner’s application for an FHA loan. Likewise, the FHA has to approve the condominium controlled by the HOA before it will approve the borrower’s application. This can lead to a sticky legal mess when trying to obtain FHA condo approvals.

The HOA’s condominium must meet the requirements stipulated by the FHA. These requirements place restrictions on how many units a single investor can own. No more than 10 percent of the units may be owned by any one investor. The condominium must have 50 percent of its units sold, and 50 percent must also be occupied by their legal owners. No more than 15 percent of the owners may be in arrears on their dues (more than 30 days late). FHA condo approvals are a tricky process filled with legalese and challenging paperwork.