Connecticut Real Estate Attorney Law Blog

FHA ........ Major Condo Approval Change!!!

There has been much discussion about recent changes in FHA approvals for condos.  By way of background, when an FHA loan is made for a condo unit, the complex must be 'approved' by HUD before the FHA loan can be made.  In the past (or more accurately until November) this could be done by a formal approval by HUD itself or by a 'spot approval' whereby the lender would review certain aspects of the condo complex for the purposes of making that one loan.  HUD has now abolished the spot approval, and generally made the pprocess more complex, while at the same time loosening some of the requirements.  See the blog post below as well as the links in this post for a good explanation of the changes and their potential impact.  In addition to the blog post below, here is a link to a blog from a Massachusetts attorney that also explains the changes.  The National Association of Realtors and other organizations have requested modifications to the changes, so this may still be a work in progress.  Personally, I am not quite as pessimistic as to the effect of these changes.  Some of them will make the approval process easier in substance, although the paperwork required is more significant.  Plus once a complex is approved using this new process, it will not need to be reviewed again (unlike the spot process which was loan specific).  I will keep an eye on this issue to see what happens as November 2 approaches.

Here is a blog post from an experienced FHA lender in Connecticut that explains the recent delay in the changes and provides a good explanation of what we can expect.

Via George Souto (McCue Mortgage) FHA, CHFA, VA Mortgages CT.:

Back on June 16 of this year I wrote a blog "FHA ........ Major Condo Approval Change!!!" which covered the New FHA Condo Approval Process that was to go into affect on October 1st of this year.  Well FHA has just made it known that the New Condo Approval Process will now not go into affect until November 2nd.  This means that we have an additional month now to be able to do "Spot Condo Approvals" instead of a "Full Condo Complex Approval" on Condo Complexes that are not presently on the FHA Condo Approval List.

A quick recap of what the major changes will be to the new process are:

  • FHA will now allow lenders who are "Direct Endorsement Lender" to determine project eligibility, review project documentation, and certify to compliance of Section 203(b) of the NHA and 24 CFR 203 of HUD’s regulations.
  • An Environmental Study will no longer be required in most cases.
  • The Right of First Refusal will not longer be an issue.
  • Spot Condo Approvals will be eliminated.

I will try to keep everyone informed on any further changes or delays to the New FHA Condo Approval Process as I am made aware of them.



Info about the author:

George Souto is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 or [email protected]


About the author:  Attorney Begemann is a member of the Connecticut Bar and practices real estate and business law in Connecticut.  As an experienced real estate attorney he represents individuals and lenders in residential and commercial loan closings across Connecticut, including the purchase, sale and refinance of real estate.

Attorney Paul H. Begemann, 2764 Whitney Avenue, Hamden, CT  06518

Phone 203-230-8739                                       Fax 800-483-1904



0 commentsPaul Begemann • October 08 2009 07:31AM