![]() The issues preventing your project from being approved may be things you don’t know, wouldn’t have even thought about, and can’t readily see. The project must be reviewed if it has yet to go through complete approval within the past 2 years. The project packages went back to HUD for approval in almost all cases, and that is where it stands today – with HUD. Lenders were unwilling to assume this risk. The lender became responsible for the project’s approval even when they were not necessarily the company closing other loans. The HRAP and DELRAP that HUD thought would be a system that would take a lot of the project approval of HUD and allow lenders to make some of the determinations did not meet this objective. HUD sought to allow lenders to approve projects with the DELRAP option while the HRAP would still be HUD receiving the documentation and approving the project. That Mortgagee Letter established two ways to approve projects the HRAP or DELRAP process (the difference being whether a delegated lender does the approval or HUD does). In other words, a project approval expired with this new process every 2 years, and the project had to go through a whole new project approval every two years. All new loans had to follow the new guidelines for all borrowers who got their Case Numbers on or after December 7, 2009. Mortgagee Letter 2009-46 eliminated the Spot Approval Process and established a 2-year recertification period for all projects already on the approved list. ![]() Many borrowers could obtain forward and reverse mortgage loans insured by FHA on HUD programs in condominium projects with a minimal review, as most projects only approached the 10% maximum after obtaining HUD approval. HUD stipulated that they could not already have more than a concentration of insurance outstanding on loans on 10% or more of the units in the project (without having the entire project approved and then the 10% limitation removed). This allowed reverse mortgage lenders ( and banks ) to fund FHA loans in condominium projects not previously approved without having to get the entire project submitted for approval if the reverse mortgage lender was willing to make a relative few certifications. By way of a bit of history, on August 1, 1996, HUD established the “Spot Approval” process for condominium projects which also contained a 14-question “Suggested Checklist for Spot Loan Approvals” (Mortgagee Letter 96-41). It all started when HUD published Mortgagee Letter 2009-46. If so, HUD must review this issue at approval and may decline the project. The association is involved in litigation other than foreclosure proceedings involving unit owners. Leave yourself enough time to get the project documentation together, have it reviewed, and leave an out in the contract if the project status changes. Your best bet is always to look for a property already on the HUD-approved list but remember, this is not a 100% guarantee if something happened between the time HUD placed the project on the list and now you wish to purchase. ![]() Still, I warn you about trying to be your own “condominium expert.” You can always look at the HUD condominium guide online at. You want to avoid finding yourself in a situation where you risk losing your deposit or worse.įinally, if you are looking at a reverse mortgage for your existing condominium and the project is not on the current HUD-approved list, check with your HOA to see if they have recently applied for approval as it might save you some time and expense, and remember the 7 most common reasons for project denial. The last thing you want to do is place an offer on a condominium unit only to find that you have a deadline and cannot perform, must waive contingencies, and then find out that HUD will not approve the project through no fault of yours or your lender’s. This is something to remember if you plan to purchase with a reverse mortgage considering the time constraints on most purchases and the fact that a project approval can take eight weeks or longer (if it gets approved). We see more projects being declined than approved by about a 2 – 1 ratio. So, the shocking truth about reverse mortgages with condominiums is that even though you may not owe anything on your unit, and you may meet the age requirements, the inability to lend with a government-insured loan in your project or even the project manager itself may prevent you from being able to get a reverse mortgage. But sadly, some HOAs still confused HUD approval with Section 8 and low-income housing and have refused to cooperate, forcing their senior owners into decisions they were not ready to make We had shown that the sales prices of many projects increased when they opened the project to more potential buyers. How condo associations benefit from Reverse Mortgages?
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