Filed under FHA FAQ, FHA Mortgagee Letters, FHA news · Tagged: FHA streamline
In a June letter to FHA lenders from HUD, the FHA mortgage guideline revisions for condominiums and town homes were announced and documented. Unfortunately for condo owners, the guidelines have tightened for FHA lending and qualifying for mortgage refinancing may become more difficult than in previous years.
Project approval is no longer required for FHA. FHA streamline refinance loans for HUD Real Estate Owned (REO) sales. If you presently have a FHA mortgage and want a streamline refinance then you are blessed with an easier path for lowering your mortgage rate. Currently having a FHA loan is a HUD requirement for FHA streamline refinancing.
Ineligible properties include condominium (“condotels”), timeshares or segmented ownership projects, houseboat projects, multi-dwelling unit condominiums [i.e. more than one dwelling per condominium unit], and all projects not deemed to be used primarily as residential.
Here are some additional standards for condo properties, as explained by HUD:
o At least 50% of the units of a project must be owner-occupied or sold to owners who intend 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 presold units (the minimum presales requirement of 50% still applies).
o No more than 15% of the total units can be in arrears (more than 30 days past due) of their condominium association fee payment.
o Projects consisting of three or less units will have no more than one unit encumbered with FHA insurance.
o Projects consisting of four or more units will have no more than 30% of the total units encumbered with FHA insurance.