Mortgagee Letter 2009-19 was issued on June 12, 2009 and provided guidance for the new approval process for Condo’s. The changes are dramatic. Currently, FHA has a list of Approved Condo’s. If a project is on the approved list then FHA financing is allowed, providing the project meets (or met) the 51% owner occupancy percentage. The new guidelines are set to go into effect on October 1, 2009, according to the letter. However, thank you to the National Association of Realtors, HUD announced a one month delay. The effective date is now set to be November 2, 2009.
While the list was not perfect, as many projects in areas of California, such as Orange County, Los Angeles, and San Diego, were not on the list, there were still many approved projects. Because the Spot Approval Process provided a way for closing FHA loans in projects that were not approved, very few, if any, projects have gone through the approval process in the last 12 months. This is bad news, because, because according to the new guidelines, any project that was not approved in the past 12 months will be taken off the FHA Condo Approval list. This essentially means the list will be wiped clean on November 2, 2009. At that time, the Condo Approval process will go into effect. There is no telling how long the process will be for getting a project approved. But don’t plan on a 30 or 45 day escrow, at least not in the first few months of everyone getting used to the new guidelines. 90 days may be more realistic.
The transaction doesn’t need to close by November 2. The lender just needs to at least pull the FHA Case Number. the timing actually coincides with the First Time Buyer Tax Credit, which is set to expire on November 30, 2009. The $8,000 tax credit has really benefitted Orange County First Time Home Buyers, and many of those home buyers were purchasing condo’s. FHA is just about the only loan program allowing for a small down payment. For those Veterans out there, the VA loan program offers 100% financing, even on condo’s. (In Orange County, CA VA offers 100% financing up to $737,500.)
To find out if a condo project is FHA approved, use the FHA condo approval search function at the HUD website. As of this writing there only only 30 days left. Move quickly. Of course, make sure to get preapproved for an Orange County FHA loan before getting too deep into the home search.
Authored by Tim Storm, an Orange County, CA Loan Officer – Please contact my office at Trust One Mortgage for more information about an Orange County, CA home loan. 877-786-4243 x 7.
Call our office today and see how we can help you and your family. Ask for your Free First Time Home Buyer Report.
877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com
*Trust One Mortgage Corporation is licensed and supervised by the California Department of Real Estate (“DRE”), License # 01087829
*This is not an offer to lend. 
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