The US Department of Housing and Urban Development announced it’s delaying the implementation of FHA’s new policy guidance for condo project approval and condo unit financing until December 7th 2009.

The new guidance is expected to be issued in the next two weeks and will:

1. offer additional leniencies to address the difficult market conditions
2. augment some portions of FHA Mortgagee Letter 2009-19, providing additional information and clarification

There has been concern from reverse mortgage lenders that their DE underwriters are taking on untold risk by authorizing a condo without additional guidance from HUD.  Until then, HUD said lenders may continue to use the Spot Loan Approval guidance issued in Mortgagee Letter 1996-41.

Generation Mortgage announced earlier today that it would not be participating in the new process of approving condo projects and unless more guidance is issued I’d expect others to follow their lead.