Condominiums

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Chapter 1
Appraisal & Property Requirements
Page 1-28

Requirements:

A. Phasing - Constructing or Converting a Project in Phases or Stages. CFR- 234.26(i). The Homeownership Centers may approve phasing of condominium developments provided the phases or stages are legal, and consistent with the phases described in the condominium declaration, i.e., a phase has to be declared as a phase to be legitimately approved as a phase.

B. Spot Loan Approval in a Condominium Project - Mortgagee Letter 96-41, CFR- 234.26(i). Under certain circumstances lenders may approve an individual unit within an existing condominium project without HUD's prior project approval. Lenders are encouraged to submit the complete approval package to HUD so that the project can be processed and ready for the next applicant seeking a loan in that project. See Spot Loan Approval in a Condominium Project.

Mortgagee Letter 96-41 provided a "Suggested Checklist for Spot Loan Approvals". Lenders must perform an underwriting analysis and CERTIFY that the project satisfies the eligibility criteria for a spot loan approval. To determine if the unit is eligible under the spot loan procedure, lenders may use information from the appraiser, the owners association, the management company, the real estate broker, or the project developer. The lender is not required to search public records or provide documentation reflecting the total number of FHA insured mortgages within the project in supporting the spot loan approval; however, it remains the lenders responsibility to ensure the accuracy of the information it relies upon in making its certification. If the lender is not able to obtain sufficient information to determine the percentage of FHA insured mortgages in the project they may make the statement that the percentage is unknown. The completed checklist, certified by the lender, must be included in the insuring binder.

NOTE: Individual units within a condominium project that has been previously approved, rejected or withdrawn by HUD are not eligible under the spot approval process.