After 2 years of temporary guidance, the Department of Housing and Urban Development has established the final condominium approval process for single family housing.
In releasing Mortgagee Letter 2011-22 and accompanying "Condominium Project Approval and Processing Guide," sets the minimum standards for approving condominium projects for Federal Housing Administration (FHA) loans, including HECM loans.
The new guide consolidates information provided in the temporary guidance provided by Mortgagee Letters 2009-46 b and 2009-46, and extended by Mortgagee Letter 2011-03. The guide provides for two options for approval processing, either through HUD Review and Approval Process (HRAP) or by lenders through the Direct Endorsement Lender Review and Approval Process (DELRAP).
Under the HRAP process, all required documentation can be submitted to FHA staff to be reviewed for approval. The guide indicates that the processing time for new approvals and reconsiderations will be up to 30 calendar days from receipt of a complete package.
In order to approve condominium projects under DELRAP, lenders must meet certain criteria. First, the mortgagee must have unconditional Direct Endorsement authority for FHA loans. Staff tasked with reviewing projects must demonstrate knowledge and expertise in condominium review and approval, and must be registered with the FHA through FHA Connection. The mortgagee is also required to maintain a Quality Control Plan that includes the process for reviewing and approving condominium projects.
Mortgagees who decided to approve condominiums under DELRAP, must submit all approvals or denials to FHA Connection within 5 business days of final disposition. Initially, mortgagees must have their first 5 approvals reviewed by FHA staff, following their disposition.
Florida is the only exception where DELRAP is not available and all condominium projects must be submitted for review under the HRAP program by the Atlanta Home Ownership Center.
Mortgagee Letter 2011-22, dated June 30th, 2011 has an effective date set 60 days following the issue date.
