HUD Updates Condo Approval Process For Reverse Mortgages

image 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

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  • “ML 2009-19 immediately eliminates the spot condo approval process” – quothe the admin.

    We agree with thou that the ML reads “immediately upon issuance”, not upon effective date of the ML. However, with an abundance of caution, we reached out to two sources at HUD, who gave us a different response to our query.

    So how doest thou read “effective upon issuance”? Sounds to us as if Spots have passed on, effective NOW.


  • I am happy to know that FHA/HUD has approved condominium reverse mortgages thru Sect. 203(b). I now hope that we will get approval for REINSTATEMENT of reverse mortgages for seniors owning co-ops in NYC. Now, especially due to escalating food, RX, taxes and maintenance fees, we could use a boast.
    We have owned our co-ops many years, now having 100% equity due to no mortgage. A reverse mortgage would make a senior self-sufficient by utilizing equity.
    Please, I ask all who live in a NYC cooperative and can benefit from a reverse mortgage to contact your legislators. Send a note requesting that they work diligently to present a revision of the laws needed to allow REINSTATEMENT OF NYC REVERSE MORTGAGES FOR SENIORS LIVING IN COOPERATIVES.

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