The Department of Housing and Urban Development published Mortgagee Letter 2009-19 which implements a new approval process for condominium projects to qualify for FHA insured mortgages in accordance with the Housing and Economic Recovery Act.  FHA will now allow lenders 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.

ML 2009-19 immediately eliminates the spot condo approval process and clarifies that manufactured housing condominium projects qualify for both Home Equity Conversion Mortgages and forward mortgages.

Lenders will have two condominium project approval processing options:

1. HUD Review and Approval Process (HRAP).
2. Direct Endorsement Lender Review and Approval Process (DELRAP), outlined in this Mortgagee Letter. This option is only available to lenders who have unconditional Direct Endorsement authority and staff with knowledge and expertise in reviewing and approving condominium projects.

According to the ML, condo project approvals will expire two years from the date it was placed on the approved list.  Further participation in the program after this two-year period will require recertification to determine that the project is still in compliance with HUD’s owner-occupancy requirement and that no conditions currently exist which would present an unacceptable risk to FHA.

The requirements of ML 09-10 are effective for all case numbers assigned on or after October 1, 2009 except as noted.

Mortgagee Letter 2009-19