Fha Cert Docs

John Poast 300 N. Elizabeth St., Floor 3E
Senior Vice President Chicago, IL 60607
jpoast@chicagobancorp.com Ph: (312) 738 - 6242
NMLS#: 217402 Fax: (312) 491 - 5306

FHA Condominium Approval Process

Full project approval replaced Spot Approval as of December 2009. Every FHA loan for a
condominium purchase must have proof of project approval. Getting your listing approved for
FHA loans allows many more buyers to be eligible. Some of the advantages of FHA approval are:

 3.5% down payment (Conventional loans require 5-20%)
 620 minimum credit score (Conventional requires 680 for 5% down)
 51% Owner Occupancy (Conventional loans require 70-75% Owners)
 First Right of Refusal is no longer a deal-breaker.
 50% of the units in the association can be FHA loans (increased from 30%)

It is in your best interests to start the project approval process as soon as you list the property.
As the listing agent, you are able to get many of the required documents easier than your buyer’s
lender. The condo association may need time to provide the required submission documents. An
attorney letter is required and that could take a few days. Once you submit everything to HUD it
takes 3-4 weeks for approval. There could be a long closing delay if you wait for your buyer’s
lender to initiate this process.

The following pages list the required documents to get a condominium association approved by
HUD for FHA loans. Please note that HUD and FHA guidelines change constantly. This guide
was printed 2/12/2010. Please feel free to contact me if you have questions.

I look forward to working with you and your customers.

Sincerely,

John Poast
Senior Vice President
Chicago Bancorp

NMLS#: 217402 Fax: (312) 491 - 5306

Step 1: Check to see if your condominium is already FHA Approved.
Go to the following web address: www.tinyurl.com/BancorpCondoCheck

Enter the ZIP code of your condominium and check the results to see if your association is listed.

A. If the approval is more than 24 months ago then the association must be approved
again.

The documents on the following pages are required:
B. If the approval is less than 24 months ago then the association must be re-warranted
by HUD. The following documents are required and you do not have to resubmit a full
package for approval:
1. Condominium Questionnaire
2. Association declarations, budget and by-laws
3. Signed letter from the association stating the percentage of investor units, units
with delinquent assessments and ownership concentration (example is enclosed).

C. If the association was approved after December 7, 2009, then the only required
documents are the Condominium Questionnaire and the Association Letter.

Have these documents ready for your buyer’s lender and that is it!

Step 2: Get the condominium questionnaire completed.
The attached condominium questionnaire asks all of the basic questions that HUD wants to
know. The page after the questionnaire has the answers. Have your seller submit the
questionnaire to the association. This can save a lot of time and it will help you avoid roadblocks.
The questionnaire allows you to verify that the association has adequate cash reserves and
appropriate levels of delinquent assessments and/or rental units.

NMLS#: 217402 Fax: (312) 491 - 5306

Step 3: Use the page for your type of condominium association and collect the
required documents. Once you have ALL of the documents, mail your approval to
HUD:

U. S. Department of Housing and Urban Development
Denver Homeownership Center
Attn: Technical Support Branch, 21st Floor * 1670 Broadway * Denver, CO 80202

To check status or to get additional assistance on any other HUD/FHA-related matters, please
contact: 1-800-Call-FHA (1-800-225-5342) or email the HUD Resource Center at
hud@custhelp.com.

NMLS#: 217402 Fax: (312) 491 - 5306

EXISTING CONDOMINIUM CHECKLIST
(Project completed more than one year)

The following documents must be submitted for condominium approval consideration:

♦ Cover Letter - (List all documents enclosed) State requested action; name and location (street
address, city, county, state and zip code) of the condominium; description of the project including
type of structure(s), number of units and common facilities; and name, address and phone number
of a contact person.

♦ Location Map - identify location of condominium. (Yahoo! or Google map is acceptable)

♦ Recorded project plat, map and/or air lot survey which adequately identifies units.

♦ Condominium legal documents - the following exhibits are required:

♦ Declaration of Covenants, Conditions and Restrictions – recorded

♦ Articles of Incorporation - filed with state

♦ By-laws - signed by Homeowners Association (HOA)

♦ Attorney’s Opinion Letter stating that all the HOA legal documents have been properly
filed or recorded and are consistent with legal policies set out in HUD Handbook 4265.1,
Change 4, Appendix 24, and comply with all state and local laws. (This is a 38-page document
that is available on the Internet if you search HUD Handbook 4265.1)

♦ Condominium association budget and financial statement including reserves of at least
10% of the annual budget to cover maintenance, repair and replacement of the common
elements. (2010 and 2009)

♦ Minutes of last two meetings of the homeowners association.

♦ Certification (on appropriate company letterhead) from the HOA that the project meets the
51% owner occupancy requirement.

♦ Month and year completed.

NMLS#: 217402 Fax: (312) 491 - 5306

CONDOMINIUMS UNDER CONSTRUCTION OR EXISTING
LESS THAN 1 YEAR
The following documents must be submitted for approval consideration:
♦ Cover Letter - (List all documents enclosed) State requested action; name and address (street
address, city, county, state and zip code) of the condominium; description of the project including
type of structure(s), number of units and common facilities; and name, address and phone
number of a contact person.

♦ Location Map - Identify location of condominiums. (Yahoo! or Google map is acceptable)

♦ Recorded Project Plat Map and/or Air Lot Survey: which adequately identifies units;
complete with engineer’s stamp, date and signature.

♦ Developer’s general plan and schedule of development.

♦ Condominium legal documents - the following exhibits are required:
♦ Declaration of Covenants, Conditions and Restrictions - recorded
♦ By-laws signed by Homeowners Association (HOA)

♦ Attorney’s Opinion Letter: stating that all the HOA legal documents have been properly
filed or recorded and are consistent with legal policies set out in HUD Handbook 4265.1,
Change 4, Appendix 24, and comply with all state and local laws. (This is a 38-page document
that is available on the Internet if you search HUD Handbook 4265.1)

♦ Proposed condominium association budget: including reserves of at least 10% of the
annual budget to cover maintenance, repair and replacement of the common elements.

♦ Evidence: (on appropriate company letterhead) that an escrow account, surety bond or
bank irrevocable letter of credit has been established with a balance equal to 1/x the cost for
completion of the unfinished common areas.

♦ Management agreement or proposed management plan.

♦ Minutes of last two meetings of the homeowners association, if applicable.
♦ Certification: (on appropriate company letterhead) from the HOA that the project meets the
51% owner occupancy requirement.

♦ Month and year completed, if applicable.

NMLS#: 217402 Fax: (312) 491 - 5306

THE FOLLOWING THREE PAGES ARE ONLY FOR CONDOMINIUMS THAT USED TO
BE RENTAL APARTMENT BUILDINGS

CONDOMINIUM CO/VERTED FROM RENTAL HOUSING
WITH OPERATING ASSOCIATION
(The developer has relinquished control of the association to the homeowners.)

Units in a rental project which are to be converted to condominium ownership may
not be insured until the project has been converted over one year. Conversion takes
place when all the legal documents establishing the condominium have been recorded.
The one year restriction does not apply to:

1) Rental projects in which the conversion was sponsored by a bona fide tenants’ organization
representing a majority of the households in the project. 2) Non-rental properties such as a
school, church, or warehouse converted to condominiums or 3) a unit being sold to a purchaser
who was a tenant in the project at the time of the conversion as evidenced by a fully executed
contract and a rental agreement. Without one of the above restrictions being met, there
will be no consideration given to the project and the package will be returned.

The following documents must be submitted for approval consideration from the
Lender, Homeowners Association (HOA) or management company:

1. Cover letter - (List all documents enclosed) State requested action; name and location
(street address, city, county, state and zip code) of condominium; description of the project
including type of structure(s), number of units and common facilities; and name, address
and phone number of a contact person.

2. Condominium legal documents -the following exhibits are required:

♦ Declaration of Covenants, Conditions and Restrictions - recorded
♦ By-laws - signed by HOA

3. Attorney’s opinion letter stating that all the HOA legal documents have been properly
filed or recorded and are consistent with legal policies set forth in HUD Handbook
4265.1, Change 4, Appendix 24, and comply with all state and local laws. (This is a 38-
page document that is available on the Internet if you search HUD Handbook 4265.1)

4. Recorded plat, plan, survey or map, including amendments of project.

NMLS#: 217402 Fax: (312) 491 - 5306

5. Location map - identify location of the condominium. (Yahoo! or Google map is
acceptable)

6. Condominium association budget and financial statement including reserves of at
least 10% of the annual budget to cover maintenance, repair and replacement of the
common elements. (2010 and 2009).

7. Minutes of the last two meetings of the HOA.

8. Management company report - if applicable.

9. Certification (on appropriate company letterhead) from the HOA or management
company that the project meets the 51% owner occupancy requirement.

Project containing multiple buildings may be phased for marketing purposes only
(51% owner occupancy required for each building). HIGH RISE APARTMENT
BUILDINGS CANNOT BE PHASED. Additional land or buildings may not be annexed
to the condominium project after our initial approval.

NMLS#: 217402 Fax: (312) 491 - 5306

CONDOMINIUM CONVERTED FROM RENTAL
HOUSING WITH NON-OPERATING ASSOCIATION
(A Non-Operating Association is when some original units remain unsold and the developer may not
have relinquished control of the condominium to the homeowners.)

Everything on the previous page for Operating Associations also applies to
Non-Operating Associations. In addition:

1. Recorded plat, map and/or air lot survey which adequately identifies
units (replaces #4)

2. Management agreement and report- if applicable (replaces #8).

3. Evidence of completion of the project (including the common elements) i.e.
final municipal approval and occupancy certification.

NMLS#: 217402 Fax: (312) 491 - 5306

VETERANS AFFAIRS (VA) - CONDOMINIUM RECIPROCITY
Your condominium might have previously been approved by VA for a VA
loan. The following documents must be submitted to HUD for FHA
approval based on previously submitted VA documents:

♦ VA’s letter of approval or a copy of VA’s computer printout.

♦ Certification (on appropriate company letterhead) from the HOA or direct
endorsement lender that the project meets the 51% owner occupancy requirement.

♦ Condominium association budget and financial statement including
reserves of at least 10% of the annual budget to cover maintenance, repair and
replacement of the common elements. (2010 and 2009).

♦ Location map - identify location of the condominium. (Yahoo! or Google map is
OK)

♦ Street address, city, county, state and zip code of the property.

Note: Even though FHA accepts VA’s approval of the condominium project, by
statute, FHA is required to perform an environmental assessment of the project.
This additional requirement does add extra time to the approval process.

NMLS#: 217402 Fax: (312) 491 - 5306

SAMPLE CO/DOMI/IUM RECERTIFICATIO/ LETTER:

DATE:

RE: FHA Approved Condominium Project #XXX, AKA (Property Address), with
approval expiring XX/XX/20XX.

To Whom It May Concern,

This correspondence is to verify that no more than 10% of the units within this X-
unit complex are owned by one investor, that no more than 15% of owners are in
arrears for condominium association fees and that the project has at least a 50%
owner occupancy rate.

Sincerely,

Name and Title

NMLS#: 217402 Fax: (312) 491 - 5306

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