I would have to say FHA has helped to bolster the majority of our books over the last 24+ months. Without it there would be even fewer of us still in business today. That said, having David Stevens at the helm of the FHA has been a blessing in disguise. He'll be making necessary changes as he sees fit so that we can all have an origination source and platform going forward.However, these changes aren't necessarily going to be easy to swallow. 

Just a as a reminder about what changes have taken effect @ FHA and which Changes are coming soon (as announced by ML).

1.    The Spot Approval Process has been Eliminated all together, if your Condo project is NOT approved there are specific rules that must be followed (ML09-46a/ML09-46b) more on this below.

2.    HVCC for FHA: As of any case file number issued on or after February 15^th, 2010 you will have to order your FHA appraisal through an HVCC styled appraisal source, provided by your sponsoring lender (yours truly).

3.    UFMIP Increase: On April 5^th, 2010 the UFMIP for any case file issued on or after this date will INCREASE to 2.25% for relatively all of your FHA loans (purchase, refinance, streamline refi). (ML10-02)

4.    Short Sales - this policy jives with my company's stance since day I started. IF your borrower has a short sale (with certain specific instances excepting) they will need to wait a full 3 years (as with Foreclosure) before being eligible for FHA financing. (ML09-52)

5.    Appraisal Portability - Any appraisal completed after January 1^st, 2010 is only valid for 120 days from its completion date. This is shorter by 2 months of the previous rule which required 180 days waiting period before a new appraisal could be issued on a property. (ML09-29).

More on Condos and the approval process:  The new processes are:

HRAP - HUD Review and Approval Process  - HUD reviews the project for approval to lend

DELRAP - Direct Endorsement Lender Review and Approval Process: the Sponsor/Lender reviews the project, bylaws and financials for approval and allows for FHA financing in the project. This is tricky with respect to risk and we're hearing that many if not most Sponsors/Lenders (mine included) will not be participating in this specific process.  We will only be writing loans in previously approved projects (those showing on HUD's approved list). If the Document status shows as "Unrecorded" we will be unable to move forward. Some updates to the project approvals are:

1.    No more than 10% owned by one investor

2.    No more than 15% of the HOA dues are in arrears

3.    The project must have 50% Owner Occupancy Rate

4.    No more than 50% FHA concentration (or up to 100% if ML09-46a terms are met).

Guaranteed this will make financing Condo's (at least in the near term) much harder than before.

So: Keep this list.. remember..learn it. love it. share it with your partners and let's get the loans in that fit.

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