FHA Condo Approval process has changed

As we are all aware, the FHA Condo Approval process has changed — Spot Approvals are no longer available  — condominiums have to be fully approved by FHA.There are two ways to approve a condominium through FHA.  They are:

      1.  HRAP – go directly through HUD for condo approval — this can take 4 to 6 weeks. 

 OR

       2.  DELRAP -  go through a direct endorsement lender which can approve the condo in-house.  Wells Fargo/Prosperity’s project approval team can approve a         project in 7 to 9 business days - a HUGE advantage for us.  Other lenders are taking over 30 days to approve a condo.

 Cost

 The cost to get an existing condo approved in-house through Wells Fargo is $300, which at this time, our local branch is absorbing!!

 The cost of getting a new condominium approved in-house is $1,000, which we are requiring the developer to cover (remember they have an inherent interest in getting the FHA approval and getting it as fast as possible).

 Appraisal

 We cannot order the appraisal until the building is fully approved –  Please consider this when discussing the appraisal contingency period. 

 Approved List

 Once a condo is approved, it is posted to HUD’s webpage and added to the Approved List.  Once a condo is added to the approved list, any lender can use the approval.

 Process

 Scenario 1 -  The condo is already Approved – go to the FHA condo approval website (https://entp.hud.gov/idapp/html/condlook.cfm) to see if the condo is already on the approved list.  If it is, only ONE additional item is needed — the FHA condo checklist (attached).  As you’ll see, this checklist is only seven questions and is used to make sure that the condominium remains sound and still conforms to FHA’s approval criteria. 

If a building is on the approved list,  but the checklist reveals an item that no longer conforms to FHA’s guidelines, the condo will not be eligible for FHA financing.

        Example:  A condo is on the approved list, but the FHA checklist reveals a 60% investor ratio

This form should be completed as soon as you get a condo listing and as soon as you write an offer on a condo (and before the appraisal is ordered).  Since the checklist is only seven questions, the management company should be able to answer them rather quickly.

Scenario 2 – The condo is NOT Approved -  if after checking the FHA condo approval website you learn that the project is not approved, the loan officer will need to start the approval process.  The necessary documentation varies depending on the “Property Classification”, or whether the condo is existing, new construction, or conversion.  The loan officer will work with the management company/developer to get the required documentation for the full FHA approval.  This information includes the condo questionnaire, HOA budget, recorded declarations, condo/plat map, flood certification, insurance, etc. 

Remember, even though Wells Fargo can approve a condo in 7 to 9 business days, the overall turn time depends on how quickly the management company/developer can provide this information.  Please keep this in mind when negotiating your contingency periods.

Overview 

I know this is a lot of information, so here is a quick rundown of the important points

         * always check the FHA Approval website as soon as you get a condo listing or get a condo buyer interested in using FHA financing

        * the appraisal cannot be ordered until the condo has been approved AND the FHA checklist has been received

        * if the condo is not on the approved list, the lender will need to approve the project which will take extra time

        * even if the condo is on the list, the FHA checklist is still required to ensure that it’s still within FHA’s guidelines

 

I will be speaking about these changes at next Tuesday’s meeting (2/23) and can organize a class for those that cannot attend. 

Please call me with any questions.  Thanks!!

 Thanks to Ryan Dailey for this updated information.

 

J. Ryan Dailey
Loan Officer
Prosperity Mortgage Company

An Affiliate of Wells Fargo Home Mortgage
3201 New Mexico Ave. NW
Washington, DC 20016
202.363.1800 x3753 Tel

301.580.8236 Cell
866.359.7966 Private E-Fax
Ryan.Dailey@prosperitymortgage.com

www.RyanDaileyLoans.com – apply online

NMLS #193608

 

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Desperately seeking inventory in NW DC

Northwest DC Inventory is a bit scarce at the moment. Some sellers are waiting until the spring market to list their homes. The spring market has already sprung.

Some of my buyers (first timers and those looking to upgrade) are wondering where all the inventory is. The lack of inventory is due to the season, yet buyers are not waiting until the spring to buy. They’re anxious to buy right now.

These buyers are trying to take advantage of the federal tax credit. This means that they must have a ratified contract on a home by April 30, 2010 and settle by June 30, 2010. It’s crunch time for these buyers.

I’m not suggesting that you sell your place just for the sake of selling. I’m suggesting that if you’re waiting for the spring market, don’t wait! You’ll have more competition (other listings) to contend with in upcoming months and buyers are out earlier than in years past. Interest rates are low, the tax incentive is significant and prices are good.

Click here for MRIS Trends in Housing in the DC region.

Here is a breakdown of what you’ll see…

* New listings are down in late December. That’s typical for this time of year.There are fewer listings this year than there were at this time last year. (-6.1%. Last 3 months compared to the same 3 month period last year) Lower inventory with more active buyers is a positive sign to towards a balanced market.
* Pending sales are up from last year. 34.3%. We have seen more contracts with lower inventory. Again, that’s a good sign for the market (i.e. reaching a balanced market).

* Active listings have gone down drastically. -26.2%. Supply and demand tells you the market is stabilizing.

* Days on the market have gone down. -8.5%. The market is absorbing the inventory faster.

* Percentage of original list price received at sale is up.

* Housing affordability is up.

* Monthly supply of inventory is down to 6 months. This is very interesting because the market is considered balanced at a 6 month absorption rate. Over 6 month absorption rate is considered a buyers’ market and less than 6 months is considered a sellers’ market.

Would you like to know what your home is worth?  Call (301) 370-4499 or write to andy.peers@LNF.com.

Buyers’ Real Estate Closing Costs for Wash DC and MD (Mont. Co.)

Buyers’ Residential Real Estate Closing Costs.

Wash DC and MD (Mont. Co.)

Many real estate agents give a fairly vague answer when asked how much closing costs will run for the purchase of a home.  You may hear “3-3.5% of the contract price”. 

I’ve been guilty of this myself.  This is usually the answer we give in the early stages of a property search.

Here’s is how that 3-3.5% is broken down:

1% +/-  Lender related fees

1% +/-  Title Insurance & Attorney fees

1-1.5%  Transfer and recordation tax

The real breakdown generally comes when we’ve ratified a contract.  We have the particulars at that point.  We have the price of the property, loan amount, and proposed settlement date.

Settlement Guide: 

http://www.federaltitle.com/hud1_full.aspx

BELOW IS A GREAT Whiteboard Story by Sayitvisually.com

Closing Costs Explained Visually

HUD 1 form 

800      LOAN RELATED FEES

$_____________  801  -Loan Origination Fee (1% of loan amount)

$_____________  802  -Loan Discount Points/Placement Fees (each point. = 1% of loan amount)

$_____________  803  -Appraisal Fee   ($300-$1500; usually paid at loan application, i.e. P.O.C.)

$_____________  804  -Credit Report  $60-$75 each person/ married couple, P.O.C.)

$_____________  807  -Assumption Fee (check w/ lender, rarely used)

$_____________  808-10  -Misc. Loan fees (doc. preparation, processing, tax service, underwriting, etc.: $450-$1,000)

$_____________  811  -Loan Origination/Discount fees on second mortgage, if applicable (each point = 1% of loan amt.)

$_____________  812  -Misc. Loan fees for second mortgage, if applicable (document prep, processing, etc.: $150 – $500)