Due to an overwhelming number of requests to approve condo projects, the US Department of Housing and Urban Development (HUD) said its response times have exceeded 72 hours. The backup comes after new regulations eliminated spot approvals and require that all condo projects get re-certified. The decision is causing delays in closings for consumers says lenders.
“You’re looking at 2-4 weeks for approval turn around from FHA,” said Pall Carr, Senior Loan Officer at Security One Lending. “I cringe whenever I talk to a senior that lives in a condo, the process is very difficult and time consuming.”
As part of the new FHA condo rules, reverse mortgage lenders have two condominium project approval processing options. The first is HUD’s Review and Approval Process (HRAP), which is currently taking approximately 30 days of processing to get approved once they’re in receipt of a complete application said Gerry Glavey of the HUD Philadelphia Homeownership Center during the National Reverse Mortgage Lenders Association Road Show.
The second option is through the Direct Endorsement Lender Review and Approval Process (DELRAP), which allows lenders who have DE authority and staff with knowledge and expertise in reviewing and approving condominium projects to approve projects themselves. In theory, this should be a quicker process than the HRAP but it hasn’t been the case.
Brokers tell RMD that lenders haven’t been rushing to get condo projects approved through the DELRAP process and most have been getting conflicting information in terms of how to submit information. In fact, many big mortgage bankers have decided not to utilize the DELRAP process and are relying on major banks and HUD to get projects approved, which is part of the reason HUD is so overwhelmed with requests.