Update to FHA Condo Approval Process for San Jose
This update contains the temporary changes to the FHA Condo Approval Process for San Jose and rest of the Bay Area as outlined in Mortgage Letter 2009-46 B.
Here are the 6 things you need to know about these changes:
1. These temporary changes are effective on December 7th, 2009 through December 31st 2010; except for Spot Loan Approvals.
2. Spot Loan Approvals will be eliminated as of February 1st, 2010.
3. FHA loan concentration may be increased to 100% if the following criteria are met: a. Project construction has been 100% complete for at least 1 year, b. All units have been sold and no single entity owns more than 10% of the units, c. Project holds 10% of the budget in reserves for capital expenditures and deferred maintenance, d. Control of Home Owner’s Association has been transferred to the owners, and e. Owner-occupancy is at least 50%.
4. FHA requires a 50% owner-occupant ratio but bank-owned units that are either vacant or tenant-occupied are not required to be included the calculation.
5. New construction pre-sale requirement is temporarily reduced to 30%.