For First Time Buyers, purchasing a Condo in Orange County is not the easiest thing these days, but for at least a another month, FHA has issued a bit of a reprieve for condo shoppers. Back on June 12, FHA Mortgagee Letter 2009-19 was released, providing guidance for the new condo approval process. Details within the Mortagee Letter were somewhat vague, and some panic was created as a result.
The Condo market makes up a large percentage of homes in Orange County, CA. This is a very important section of the market, especially for First Time Buyers, who are looking for a low priced, entry level homes. Under the current FHA guidelines, to purchase a condo, the condo project needs to be on the FHA Approved Condo List. This can be found by visiting the HUD website. However, there are a large percentage of condo projects that are not on the list. The solution has been the FHA Condo Spot Approval program. While it would be possible to get the whole project approved, this would be very time consuming and expensive, especially for one transaction. The Spot Approval program is a more streamlined process that can be completed by most Orange County Direct FHA Lenders.
This new Mortgagee Letter announced the end of the Spot Approval program. To make matters worse, any condo project that had not been through the approval process within the past 24 months would be removed from the list. Since few, if any, projects in Orange County, CA have been through the approval process in that time period, the number of condo projects still approved in Orange County, CA after the new rules become effective will dwindle to an extremely small number. The deadline, according to the ML, was to be October 1, 2009. This was good news because it would at least give First Time Buyers a chance to purchase a condo and close escrow before the First Time Buyer Tax Credit deadline of November 30, 2009. (Yes, there are a few very important deadlines coming up.) However, with a big push from the National Association of Realtors, the deadline was delayed to November 3, 2009.
Now, even better news. FHA has announced they will delay the new guidelines until December 7, 2009. Apparently, they are having second thoughts and are perhaps realizing that this would be a terrible time to place such a tough restriction on Condo financing, just when the market is beginning to move again. FHA will be releasing additional information regarding Condo financing in the next few weeks, even suggesting they “will offer additional leniency’s address the current difficult market. ” That is great news.
While there is still uncertainty about what changes FHA will make, this is still great news for Orange County First Time Buyers planning to use FHA financing for a condo purchase. Those Orange County buyers who are FHA PreApproved already should step up their efforts to find a home. As has been the case for most of 2009, mortgage underwriting guidelines are continuing to tighten. Take advantage of the current low prices, low rates, and what may be (relative to future) lenient condo approval guidelines.
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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