FHA May Further Delay Implementation of New Condominium Rules

FHA May Further Delay Implementation of New Condominium Rules

The new condominium approval process under Mortgagee Letter 2009-19 was to be effective for all case numbers assigned on or after October 1, 2009. While the new effective date is for case numbers assigned on or after November 2, 2009, NAR understands that the new effective date may be delayed even further.

The site condo and manufactured housing condo project changes that have already taken effect are not affected by this delay. However, all other rules of the condominium program remain in effect. For example, lenders are permitted to offer spot loans until the new condominium rules go into effect. On July 31, 2009, NAR President Charles McMillan sent a letter to FHA Commissioner David Stevens recommending enhancements to the new condominium rule.

Mr. McMillan also discussed NAR's recommendations at a meeting with the Commissioner on September 8, 2009. NAR is calling for:
1) a reduction in the owner-occupancy requirement,
2) eliminating or increasing the FHA concentration limit,
3) reducing the pre-sale requirement, and
4) clarification of the reserve study requirement.

NAR has recently contacted FHA asking the agency to consider allowing spot loans under the new condominium rules when they go into effect.

NAR Letter to FHA on New Condominium Rule EnhancementsMortgagee Letter 2009-19: Condominium Approval Process – Single Family Housing
Jerome Nagy 202-383-1233, Megan Booth 202-383-1222