FHA has announced new clarified guidelines (Mortgagee Letters 46A & 46B) for condominium project approval and recertification, and has provided a transition strategy that will help keep the condominium market moving for another year. Here’s what you need to know:

  • All currently approved condo projects will remain on the FHA approved list.
  • Projects approved prior to October 1, 2008 will require recertification by December 7, 2010.
  • Projects approved after October 1, 2008 will require recertification 2 years from the initial approval date.


HOWEVER, this life raft has a few holes:

  • Spot loans are eliminated on case numbers on or after February 1, 2010.
  • Lenders must certify on every loan file that currently approved projects continue to comply with the following or the project is ineligible for FHA lending.
  • Investor Ownership: One investor may own no more than 10% of units.
  • Delinquent HOA Dues: No more than 15 % of total units can be in arrears (more than 30 days past due) of their condominium association fee payment.
  • Owner-Occupied Ratios: At least 50% of the units must be owner-occupied.
  • FHA Concentration: 50% of units may be FHA financed with allowance to 100% (except for new construction and conversions) when:
    o Previous 3 criteria above are met.
    o Project completed > one year and all units are sold.
    o HOA is controlled by owners
    o Project budget shows 10% capital reserves.

Nick Gioia | www.ngrealtygroup.com