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FHA Spot Approval?!?

This weekend, I went on a home tour with my realtor and found a condo that I really like.  Bad news...the developers who built the condos 2 yrs ago didn't get the complex FHA approved.  Now, sellers in the complex (roughly 5 units available) are outraged because their units aren't selling because 99% of buyers are with FHA...such as myself.

My realtor told me to talk to my mortgage lender about spot approval.  I plan to talk to them on Monday.

Is this process difficult?  Does it cost extra?  Is it guaranteed?  OR, should I just walk away and look at other listings that are FHA approved.
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May 03 2009 - US
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Replies (3)

No, the process is not difficult.

The condo association may charge to fill out the certification.  It's relatively inexpensive.

No, its not guaranteed.

I would get with your lender and go for the approval.  Should not be a problem as long as 70% of the units are owner-occupied and not rented. 

Are they telling you there may be issues with getting the complex approved?  I would think the listing agents would have run into this already and may have the answer.
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May 03 2009
For an FHA spot approval on condos where the total number of units in the complex is more than 30, no more than 10% of all the units can have an FHA mortgage. For complexes where there are 30 or less units, no more than 20% of all the units can have an FHA mortgage.
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May 03 2009
Talk to your loan originator about a "spot loan".  Here's the FHA letter giving a checklist of what needs to be satisfied which you can give to your loan originator:

http://portal.hud.gov/pls/portal/docs/PAGE/FHA_HOME/LENDERS/MORTGAGEE_LETTERS/1996_MORTGAGEE_LETTERS/96-41ML.TXT

As Bob mentioned, I would think some other listing agents have dealt with this issue so I would ask around first before diving into the "spot loan".

Good luck.
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May 07 2009
 
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