San Mateo County condo buyers and sellers may be in for shock and disappointment as new, stricter underwriting rules announced by The Department of Housing and Urban Development (HUD) scheduled take effect on December 7th, 2009 (now pushed to February 2010) for all condominiums and planned unit developments (PUD). The new underwriting rules, which apply to both purchases and refinances, are expected to drive down San Mateo condominium values – at least for the near term – and make buying and selling an especially lengthy, difficult, and uncertain process.
What’s Changing?
The entire condominium complex must be approved by HUD to get financing. Spot approvals on individual units will be eliminated. The entire complex will have to be approved for loan approval. No HUD approval means no loan and that means no sale.
Requireqments for San Mateo Condo Complex Approval
The following is a summary of the requirements needed to obtain complex approval:
- Complexes must have 2 or more units
- No more than 25% of the complex’s total floor can be commercial
- No more than 10% of the units may be owned by one investor
- No more than 15% of the units can be delinquent in their fees
- At least 50% of the units must be sold for FHA Financing
- At least 70% of the units must be sold for Conventional Financing
- At least 51% of the units must be owner occupied
- The reserve study must be no more than one year old and must show complex is at least 60% funded
- Complex approvals will expire 2 years from the date it was placed on HUD’s list
- HOA Certification (“CERTS”) will be required to verify no material changes since complex was approved on all loans
Additional Approval Requirements for FHA Financing
- Complex’s with 3 or less units – No more than 1 unit encumbered by FHA financing
- Complex’s of 4 or more units – No more than 30% of the total units encumbered by FHA financing
Lenders Required to Submit First 5 Complex’s to HUD for Approval
HUD requires at least 12 documents be submitted to approve a complex. Every lender is required to submit their first 5 complex approvals to HUD prior to issuing an approval. The turnaround time for that process is reported to be 8 weeks. However, once the lender has submitted 5 projects through HUD, they will be allowed to approve complexes on their own, which should reduce the length of time required for approval.
Stay tuned for tomorrow’s post where we’ll tell you what these new condo financing guidelines mean to home buyers, sellers, Realtors and lenders.
Looking for a San Mateo Lender Who Understands How to Get Your Loan Closed with These New Rules?
Contact our Co-Author, Chris Williamson of Mortgage California in San Mateo. Chris is a multi-platform lender, which means he is the best of all three lending platforms. He has the control of a direct lender, the wide variety of products of a mortgage broker and the flexibility of a mortgage banker. Chris is also a Co-Presenter in our San Mateo real estate classes and webinars.
Learn More About Buying Condos at our Free Workshop in December 2009
If you are considering purchasing a condominium in San Mateo you should attend our class on Tuesday December 15th at 7pm, Steps to Buying Condominiums in San Mateo where we’ll not only discuss these new financing guidelines in detail, but we’ll also reveal the critical questions you need answered before you purchase one, explain how to protect yourself and much, much more. For more information check out our Steps to Buying Condominiums in San Mateo page.
Sign Up for Condo Workshop on December 15th
If you are interested in attending our Steps to Buying Condos in San Mateo, sign up for our free program using the form below or by calling (650) 655-2500. The program is free, but space is limited so reservations are required.
cforms contact form by delicious:days
Search San Mateo Condos
Enjoyed this Post? Why Not Subscribe?
If you have enjoyed Living Well in San Mateo – san mateo real estate, please subscribe to our RSS feed.