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Changes in the FHA approval process for condos that were supposed to go into effect this week have been delayed until December 7 (a day which will live in infamy). Not only that, but the Mortgage Bankers Association suspects it will be able to remove a portion of the new guidelines that would require projects approved prior to October 1, 2007, to reapply for certification.
“Basically, since the fall of ‘07 to right now, it’s day to day, one change after another,” says Mike McNamara, a home mortgage consultant working with Wells Fargo and Koenig & Strey GMAC Real Estate.
“HUD is giving a lot of power to the lenders and with it a lot of risk. They promised too much without giving any guidance, changing a lot without creating the structure. That’s what they’re doing now.”
On the possibility that approved projects won’t need to immediately seek re-approval:
“It will help with eliminating the bottlenecks. If all these buildings were to lose their approvals, there would be a massive influx of condo associations applying for re-approval. This would make it a lot easier to transition to the new guidelines.”
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Question:
The new letter that was put out by HUD on 11/6/09 states that “projects that received approval prior to October 1, 2008, will require recertification on or before December 7, 2010.” Do these projects that were approved prior to 10/1/08 have a grace period of exactly one year from when the new guidelines become effective? In other words, are we to assume that these projects will be acceptable by FHA until 12/7/10? It doesn’t make sense considering that the intitial requirements for approval of these projects were different from the new requirements.