Condos (Are Exempt)

HUD REO’s are an exception and the development does not have to be on Approved list for buyers to use FHA financing.

U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

WASHINGTON, DC 20410-8000

ASSISTANT SECRETARY FOR HOUSINGFEDERAL HOUSING COMMISSIONER

www.hud.gov espanol.hud.gov

November 6, 2009 MORTGAGEE LETTER 2009-46 B

TO: ALL APPROVED MORTGAGEES

ALL FHA ROSTER APPRAISERS

SUBJECT: Condominium Approval Processfor Single Family Housing

In accordance with the passage of the Housing and Economic Recovery Act of 2008

(HERA), the Federal Housing Administration (FHA) is implementing a new approval process for

condominium projects and insurance requirements for mortgages on individual units, as

authorized under Section 203(b) of the National Housing Act. The requirements of this

Mortgagee Letter are effective for all case numbers assigned on or after December 7, 2009,

except as noted. This Mortgagee Letter revises and consolidates existing guidance, and therefore

replaces Mortgagee Letter 2009-19.

FHA will now allow lenders to determine project eligibility, review project

documentation, and certify to compliance with Section 203(b) of the NHA and 24 CFR 203 of

FHA’s regulations. FHA will continue to maintain a list of approved condominium projects.

Lenders will be required to retain all the project legal documents, contracts, conveyances, plats,

plans, insurance coverage, presale and owner occupancy conditions and other documentation in

connection with their review and approval of the condominium project.

PROJECT APPROVAL

I. Approval Processing Options

A. Lenders will have two condominium project approval processing options. The

applicable documentation requirements will be the same for each option:

1. HUD Review and Approval Process(HRAP).

2. Direct Endorsement Lender Review and Approval Process (DELRAP), outlined

in this Mortgagee Letter. This option is only available to lenders who have

unconditional Direct Endorsement authority and staff with knowledge and

expertise in reviewing and approving condominium projects.

Under DELRAP, lenders must provide the condominium approval or denial

documents to FHA within five (5) business days of final disposition. These

documents must be uploaded using pdf format through FHA Connection.

In accordance with the passage of the Housing and Economic Recovery Act of 2008

(HERA), the Federal Housing Administration (FHA) is implementing a new approval process for

condominium projects and insurance requirements for mortgages on individual units, as

authorized under Section 203(b) of the National Housing Act. The requirements of this

Mortgagee Letter are effective for all case numbers assigned on or after December 7, 2009,

except as noted. This Mortgagee Letter revises and consolidates existing guidance, and therefore

replaces Mortgagee Letter 2009-19.

FHA will now allow lenders to determine project eligibility, review project

documentation, and certify to compliance with Section 203(b) of the NHA and 24 CFR 203 of

FHA’s regulations. FHA will continue to maintain a list of approved condominium projects.

Lenders will be required to retain all the project legal documents, contracts, conveyances, plats,

plans, insurance coverage, presale and owner occupancy conditions and other documentation in

connection with their review and approval of the condominium project.

PROJECT APPROVAL

I. Approval Processing Options

A. Lenders will have two condominium project approval processing options. The

applicable documentation requirements will be the same for each option:

1. HUD Review and Approval Process(HRAP).

2. Direct Endorsement Lender Review and Approval Process (DELRAP), outlined

in this Mortgagee Letter. This option is only available to lenders who have

unconditional Direct Endorsement authority and staff with knowledge and

expertise in reviewing and approving condominium projects.

Under DELRAP, lenders must provide the condominium approval or denial

documents to FHA within five (5) business days of final disposition. These

documents must be uploaded using pdf format through FHA Connection.

Link: http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/09-46bml.pdf