In February, we were saddened to learn of the retirement of the Chief in FHA’s Philadelphia Homeownership Center (PHOC).  We had a great working relationship with her and had met her in 2014 at the Round Table sessions in Washington DC.  A few weeks ago, she was replaced and since then, we have seen some changes in procedure and the level of scrutiny.

One of the major procedural change that has taken place is when a condominium project approval file gets rejected.  Previously when a file was rejected, we would submit the conditional documents and the file would go back in queue.  This meant that it would go back to the bottom of the stack of files and could take another 2-3 weeks to be reviewed…even if it was only one or two small documents.

Now, we are given 5 calendar days to submit the missing documents/information.  If we adhere to that timeframe, the file will stay in the process rotation and will be reviewed as if it were at the top of the pile.  The only problem with this is that we are almost always going to lose two days (the weekend) because it’s 5 calendar days, not 5 business days.  All of our rejections over the past month have come on a Thursday or Friday.

A reviewer in Philadelphia mentioned to us on the phone last week that the new Chief is particularly sensitive to the financials of the condominiums.  They are more highly scrutinizing condominiums which currently have a year-to-date loss or those who posted losses in the previous fiscal year.  Requests for letters of explanation regarding the losses, up to 3 previous years’ income and expense statements and year-to-date income statements have been requested of us to explain even small losses.

We have also been told that now all files have to pass QC, which can delay the processing time of the files.  The reviewer mentioned to us that the QC team is currently about a week out to review files.  This means that after the reviewer approves the file, it will take at least another week for QC to review it.

Eight of our ten submissions prior to the change were approved on their first pass.  Since then, 6 out of 8 have been rejected; 5 of them were due to financials.

The bottom line is to be patient when submitting FHA condominium project approvals to Philadelphia.  HUD sometimes makes internal changes that it doesn’t notify the public about.  We only learn of them when files get rejected for reasons which we have never seen.  This can delay processing times at first but once we adapt to the changes, they become standard procedure.

…until the next round of changes.