The Department of Housing and Urban Development (HUD) issued a new Mortgagee Letter (ML) late Wednesday offering procedures that mortgagees must follow for single-unit approval case number assignments.
“This Mortgagee Letter provides interim instructions, pending changes being made to FHA systems, for the upcoming process of obtaining an FHA case number for a Unit in a Condominium Project that is not FHA-approved and that will be processed as a Single-Unit Approval,” the letter reads. “Under the Project Approval for Single-Family Condominiums Final Rule […] FHA will be able to insure a mortgage on a Unit in a Condominium Project that is not included in the list of FHA-approved condominiums if the project meets certain minimum requirements, including maximum FHA insurance concentration for Single-Unit Approval.”
Under the guidance of ML 2019-13, the mortgagee will be required to complete the “case number assignment screen” in FHA Connection (FHAC) before submitting the required information separately via email to the FHA Resource Center, which is required in order to process a case number request using the new single unit approval process.
Information that HUD is proposing to collect for this process is currently open for comment through the Office of Information and Regulatory Affairs (OIRA) under the Office of Management and Budget (OMB).
“If the Unit is in a Condominium Project that is not currently approved but has an FHA Condo ID, the Mortgagee will have to enter the FHA Condo ID when the FHA case number is requested,” the ML says.
FHA will also be holding an industry stakeholder briefing call, designed to assist mortgagees and others to better understand the new condominium project approval requirements. That call will take place on Tuesday, September 10 at 2:00pm Eastern time. The dial-in number is (800) 230-1092.
The guidance in the new mortgagee letter follows the news last week that FHA is now making it easier for condo owners to get reverse mortgages and other FHA financing. The new regulation and policy implementation guidance established a process for condominium approvals, effective October 15, which will expand FHA financing for qualified first time homebuyers as well as seniors looking to age in place, HUD said on a call with reporters.
“For seniors, part of our mission is to provide affordable options to age in place. Condominiums can make a lot of sense for many seniors [for reasons of affordability],” said Acting Deputy HUD Secretary and FHA Commissioner Brian D. Montgomery on the call. “Our single unit review now also includes reverse mortgages, known as Home Equity Conversion Mortgages (HECMs), designed to help seniors age in place.”
Industry participants lauded the long-awaited move as having the potential to expand the reverse mortgage market. FHA estimated this new policy will notably increase the amount of condominium projects that can now gain FHA approval, as only 6.5 percent of the more than 150,000 condominium projects in the United States are approved to participate in FHA’s mortgage insurance programs, the agency said.