FHA Condominium Approval Panel Discussion

The FHA condominium approval process has undergone major changes in the last several months. To help lenders understand the nuances of the new HUD Review and Approval Process (HRAP) and Direct Endorsement Lender Approval Process (DELRAP) I assembled a panel of experts for the event: Angelo Rea, First VP at Flagstar Bank. Angelo is very involved in government lending policies at Flagstar including training of the staff across the country. He gave the audience a great overview of the HRAP program. Flagstar has chosen, at the current time, to have all condominium projects reviewed by HUD. Anglo illustrated how highly specialized the staff must be to understand the documentation requirements even when HUD is approving the package. Project approval can take more than 30 days and you don’t want to have any items missing when HUD finally has the chance to review the documentation. Lisa Chambers, SVP National Condo/Co-op Lending at Bank of America, also joined the panel. She illustrated the advantages and disadvantages of DELRAP process. Lisa heads up a dedicated team at Bank of America to handle all FHA condo approvals. She said that a dedicated team is a critical component for such a specialized level of knowledge. There are so many details from understanding legal documents to insurance requirements and homeowner’s association management that it is requires individuals who can focus on this alone. Lisa reminded everyone that several project conditions still require the HRAP process. A lender should review a project for compliance with HUD requirements and then determine whether it will need the DELRAP or HRAP process. Darlene Shannon, Chief, Technical Support Branch at the Philladelphia Home ownership center brought the FHA expertise to the group. Darlene advised the group on several important points: * FHA will be rolling out an updated condominimum document checklist in the future although no target date can be provided at this time. * The new FHA condo inquiry email box was hit with over 7000 emails within months of it opening. The FHA condo staff is three people. We don’t have to do the math for you to figure out when you are getting an email response. The inquire mailbox was intended to be for general questions but the mailbox was flooded with questions about project approval submissions and status requests. * Remember that a condo certification is at the loan level! * There was a long discussion about verification of FHA concentration within a project. FHA Connection will reflect a percentage of FHA concentration in the project based on the case numbers it has on file. This percentage does NOT include any loans that went through a spot loan approval process. Darlene said that lenders can rely on the percentage in FHAC and that it is updated almost instantly. * The ‘legacy projects'(projects that were on the approval list before the new requirements went into effect)will all become expired at the end of this year. These projects will need recertification. FHA will be issuing a policy in the near future to inform lenders of the documentation requirements for these projects. There was a lot more information! Indecomm-Mortgage U has included all of the tips and information from the session in our Condominium Approval Support services. Check out this section of our website for more information on how you can close more loans with condo approvals!