My Condo’s FHA Approval Expired – Can We Still Close?

IMG_1094As FHA/VA Condominium Project Consultants, we do not typically get involved with the “loan level” side of things.  Our primary objective is to assist condominium projects to get on FHA’s and the VA’s Approved Condominiums List.

One question that is often asked is “if I have an FHA case number and the project’s approval expires prior to closing, can we still close the loan?

If the case number was generated prior to the expiration of the condominium’s approval, generally the answer is “yes” but it depends if the criteria is met found on pages 49-50 of the Guide.

The “Guide” is the Condominium Project Approval and Processing Guide that was released as part of ML 11-22.  Pages 49-50 reference the Mortgagee (lender) Certification requirements.

It states: “If a project is currently or was previously approved, the mortgagee must certify that it has reviewed and verified the investor ownership, percentage of owners in arrears for condominium association fees, and owner-occupancy ratio.”

This requires mortgagees to sign Appendix B of the Guide which makes certain certifications to HUD.  One such certification is that the condominium project was on FHA’s approved condominiums list when the case number was assigned.

The remainder of the certification itself reads similarly to the certification that is signed by the HOA, property manager, developer or project consultant on the project-level side, that is, before the project is approved and placed on FHA’s approved condos list.

Additionally, the Guide states that Appendix B must be signed by a representative of the mortgagee that is authorized to bind the company when the loan approval decision is made and it must be signed within 30 days prior to the date of the closing.  It cannot be signed after the loan has closed.

“My condo’s FHA approval expired – can we still close?”  If the case number was obtained prior to the expiration, then chances are you will be OK.