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Jeremiah Wean (NMLS#132221)

FHA Says We Don't Want Your Condo's

Effective February 01, 2010 FHA will no longer offer spot approval on Condominiums.  All current condominium that are presently approved will not be approved effective February 01, 2010, except those approved after October 01, 2008.  Present condo's will need to be approved under the new options.  All condo projects will require a recertification every two years.

There are two (2) approval options for Condo's:

  • HUD Review and Approval Process (HRAP)
  • Direct Endorsement Lender Review and Approval Process (DELRAP)
333 Mass Ave, Indianapolis

HUD has taken a lot of losses on large condominium projects and has been determined for a long time to get out of the approval process.

The latest guidelines are described in two separate HUD/FHA documents:  (i) Mortgagee Letter 2009-46B (the revised guidelines for FHA approval of residential condominium projects); and (ii) Mortgagee Letter 2009-46A (temporary guidance for condominium approvals).

In short, Mortgagee Letter 2009-46B replaces Letter 2009-19.  The temporary guidance (Letter 46B) acts as a buffer to ease transition from the old to the new regulations.

  • Lenders
  • Builders

Look for all Condo sells to be nearly impossible for the coming future.  HUD/FHA is not know for their speed, and Homeowner's Insurance are not know for their organization.  HUD will obviously be flooded with approval packages.  Getting a condo project back on the approved list (keep in mind the old ones will be removed from FHA Connection) will be a slow and painful process.  Until a condo appears on the list FHA financing is not an option.

The public can search for approved Condo projects from HUD.gov's website.

Eligibility Requirements for a FHA Condominium Project

  • Projects must consist of two or more units
  • No more than 25% of property's total floor area can be used for commercial purposes.  Commercial portion must be free of adverse conditions to occupants.
  • One investor may own no more than 10% of units.  This applied to developers/builders that rent vacant and unsold units.  For two and three unit properties, not single entity may own more than one unit; all units and common areas must be 100% complete; and only one unit can be conveyed to non-owner occupants.
  • Projects must be covered by hazard and liability insurance, and flood insurance if applicable.
  • Right of first refusal is permitted unless it violates discriminatory conduct under the Fair Housing Act.
  • No more than 15% of the total units can be more than 30 days delinquent on the condominium association fee payment.
  • At least 50% of the total units must be sold prior to endorsement of any mortgage on a unit.  Valid pre-sales include an executed sales agreement and evidence lender is willing to make the loan.
  • At least 50% of the units must be owner-occupied or sold to owners who intent to occupy the units.  For proposed, under construction or projects still in their initial marketing phase, FHA will allow a minimum owner occupancy amount equal to 50% of the number of pre-sold units (the minimum pre-sales requirement of 50% still applies).
  • Legal Phasing is permitted for condominium processing.  It is recommended that developers submit all known phases for initial project approval.  For purposes of calculating the owner-occupancy percentage: (i) On multi-phased projects the owner-occupancy percentages is calculated on the first declared phase and cumulatively on subsequent phases if the ownership of the project remains the same; (ii) If multi-phasing includes separate ownership per phase, each phase is calculated individually; or (iii) Single-phase condominium project approval requests must meet the owner-occupancy percentage requirement.
  • FHA Concentration: (i) Projects of three or less units will have no more than one FHA insured unit; (ii) Projects of four or more units will have no more than 30% of total units insured by FHA.
  • A current reserve study must be performed to assure that adequate funds are available for the funding of capital expenditures and maintenance.  A current study must be no more than 12 months old, if recent events or market conditions have affected the finished condition of the property that information must be included.  When reviewing the study, consideration must be given to items that have been replaced after the time that the reserve study was completed.

Don't forget to check out my main blog at: JeremiahWean.com

Your Payment isn't what it seems . . . Thanks Uncle Sam

Through the benefit of tax deductibility of mortgage interest and property taxes the amount you pay to own a home ends up being a lot less.

Savings can be approximately $200 on a $180,000 loan. You can also start the savings earlier than the end of the year.

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The Journey to Homeownership

There are Six items that you must know on your journey to homeownership. To help in realizing the dream of owning your own home you should schedule a "Pre-Approval" Consultation with Jeremiah Wean at Lakewood Lending Group, LLC. I will answer all your questions and concerns about:

1. Credit....

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The Benefits of a USDA Guaranteed Loan to Purchase a Home

The U.S. Department of Agriculture (USDA) offers a guaranteed home loan program that helps people who want to buy homes in rural communities find lenders. The USDA will work with all qualified borrowers looking for homes in rural communities – not just first time homebuyers. The program requires NO money down.

While the U.S. Department of Agriculture assists home buyers obtain a loan through easier qualifications and financing options than the traditional mortgage, they do not actually fund the loan. In all states, the USDA has partnered with a few lenders who provide the mortgages because of the repayment guaranty from the USDA. The guaranty means if the mortgage defaults, USDA pays it – which gives lenders more confidence to provide home loans to candidates they may not otherwise lend to, but who still meet the USDA underwriting guidelines and qualifications.

For individuals and families looking for rural property within the state of Indiana – there is only one county in the entire state that does not qualify for USDA guaranteed home loans!

U.S. Department of Agriculture Home Loan Benefits

There are a number of benefits of using a USDA guaranteed loan to purchase your rural home, including:

· Borrowers can finance up to 100% of the appraised home value, and are not required to put a down payment on the home. The USDA guaranteed mortgage program is one of the few 100% financing options for home loans available.

· Borrowers can receive gifts or grants and use it toward closing costs.

· The US government guaranty's the loans which means lenders can offer lower interest rates on 30 year fixed home loans.

· Flexible guidelines that allows individuals with imperfect credit to qualify for home loans.

· No expensive mortgage insurance premiums (PMI – Private Mortgage Insurance) such as those required by the FHA guaranteed home mortgage programs.

· If purchasing a handyman special or homes that need repairs, you may qualify to include the cost of those repairs in the home loan mortgage.

· No maximum purchase price for home mortgages – the amount you can borrow will be based on your ability to repay.

Who is Eligible for an Indiana USDA Guaranteed Loan?

Any individual or couple looking to buy and live in a home that is located in a USDA eligible rural area can qualify for a USDA Rural Development mortgage, if income verification is sufficient. While you don't need to have a spotless credit history, you will need to show you have the ability and willingness to make your mortgage payments, yet be considered to have insufficient financial resources to qualify for a traditional home loan.

If you have previous foreclosures or bankruptcies on your record, they need to be at least 12 months old to qualify for a USDA mortgage.

In addition to the borrower meeting certain criteria for eligibility, the property itself must also be eligible for a USDA loan. Generally, to be considered a rural property, it will be located in open country and in a town with a population of less than 10,000 people.

You can determine if the property or location you are considering is considered USDA eligible by visiting http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do and reading under Property Eligibility for the type of property you hope to purchase.

How to Apply for a USDA Guaranteed Mortgage in Indiana

If you are interested in purchasing a home in a rural area, you will want to contact an approved lender. Visit www.lakewoodlendinggroup.com/usda to start the process of getting qualified for a USDA loan.



First Time Home Buyer Seminar (Indianapolis)

Learn why now is the perfect time to buy!

Don't miss out on this excellent opportunity to get your questions answered. Hurry the $8,000 tax credit ends December 01, 2009; and the Federal Reserve is scheduled to stop buying Mortgage Backed Securities December 31, 2009 (which could lead to rates in the mid 6's).