As the ever changing lending world keeps turning and churning out new changes and regulations, we’ve got the latest updates on FHA financing for San Mateo condos. The Dept. of Housing (HUD) has announced a temporary change to their FHA condo financing policy that took effect December 7,2009 and will expire December 31,2010.
The Biggest Changes for Financing a San Mateo Condo with FHA
“Spot Loan” Approval Process
HUD stated in their November 6, 2009 mortgage letter they would be eliminating spot approvals for San Mateo condos as of December 7, 2009, which has now been extended to February 1, 2010. Spot approvals are required by lenders for complexes that are not on the FHA or HUD condominium approval list. This means that we can currently approve one specific unit in an unapproved complex.
On February 1, 2010 the new regulations will eliminate the practice of spot approvals. After February 1, 2010, we will no longer be able to just approve one San Mateo condo; we will have to approve the entire complex. This translates to more time and more paperwork to get a San Mateo condo approved when the complex is not on the HUD or FHA approved condominium list. The complex approval can add additional weeks to your transaction and there are no guarantees the complex will even be approved.
FHA Concentration Requirements
One positive for San Mateo borrowers in the new condo financing regulations are an increase in the allowed percentage of units encumbered by FHA loans in a particular complex from 30% to 50%. If a condo complex has four or more units, only 50% of the units can have an FHA loan. However in the temporary guidelines this percentage can be increased to 100% concentration of FHA loans in a complex if:
- The complex is 100% complete and construction has been completed for at least 1 year.
- 100% of the units have been sold and no entity owns more than 10% of the units ( for 10 or fewer units an investor may own no more than 1 unit)
- The project’s budget provides for the funding of replacement reserves for capital expenditures and deferred maintenance in an account representing at least 10% of the budget
- Control of the Homeowner’s Association has transferred to the owners
- The owner-occupancy ratio is at least 50%
Owner-Occupancy Requirement
At least 50% of the units in a project must be owner-occupied or sold to owners who intend to occupy the units. For under construction or projects still in their initial marketing period, FHA will allow a minimum of 50% owner occupancy for the number of presold units. Vacant or tenant-occupied foreclosures do not count in this number.
Pre-Sale Requirements
For new construction, the pre-sale requirement will be temporarily reduced to 30%, down from 50%, meaning 30% of the units must be sold before HUD will lend on the property.
Considering Buying a Condo in San Mateo?
To help San Mateo home buyers make sense of all of the condo financing new rules and regulations, I’ll be presenting a seminar with Raymond Stoklosa, Broker at The RayChel Realty Group in San Mateo to discuss the new condo financing rules, the pros and cons of buying a condo and what you can do to protect yourself. This program will be presented in San Mateo.
I’ll also be presenting a webinar that discusses the new condo financing rules and guidelines. This program will be presented online and can be accessed through any computer with an internet connection.
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For sign up information and dates all of our upcoming home buyer education workshops and webinars, check our Class Schedule page or click the Sign Up button below.
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Chris Williamson is a Mortgage Advisor with Mortgage California specializing in San Mateo Mortgage.
Related posts:
- Using FHA Financing to Finance a San Mateo Condo? Get Your Lender Involved Early
- Webinar: Financing a Condo in San Mateo
- 9 Questions to Ask When Financing a Condo with FHA
- Consider this Before Determining Whether an FHA Loan is Right for the Bay Area Borrower
- 2010 FHA Loan Limits for San Mateo County
