Orange County FHA, VA & First Time Buyer Loan Information: Orange County FHA Condo List and Spot Approval Program Get Another Extension

My goal is to provide valuable information for home buyers, both First Time Buyers and Move Up Buyers. This information will be about loan programs such as FHA ,VA, Conventional Fannie Mae and Freddie Mac, Reverse Mortgages, and even Portfolio Jumbo programs. I will also touch on tax advantages of homeownership, Rent vs. Own analysis, and any other aspect of loans and home ownership that will be of interest to Orange County home buyers and homeowners.

Orange County FHA Condo List and Spot Approval Program Get Another Extension

Orange County, CA condo buyers using FHA financing just got an extra month added to the upcoming deadline of the end of the Spot Approval program. Back on June 12, 2009, FHA Mortgagee Letter 2009-19 was released, detailing new FHA Condo project approval guidelines, and setting a date for the end of the Spot Approval program along with elimination of nearly all condo project approvals in Orange County.

New Deadline for Spot Approval Program is December 7, 2009

Initially, the deadline was to be October 1, 2009. Then, with a push from the National Association of Realtors, FHA relented and decided to delay implementation of the new policy until November 3. Now, the deadline has been delayed again until December 7, 2009.

What Will Happen When, Or if This New Policy Goes Into Effect?

FHA financing for condo's will be very difficult, at least in the near term. Currently, FHA has a list of approved condo projects. FHA financing is available for properties within those approved projects. For those projects not approved, FHA has offered the Spot Approval program. The Spot Approval program is a relatively streamlined process for allowing financing on an individual unit within a non-approved condo complex. But FHA is not comfortable with the Spot Approval program. As a matter of fact, FHA really isn't very comfortable with their Approved Condo list. So, now, effective December 7, the list will be effectively scraped clean. Any project that has not been approved in the last 2 years will need to be re-certified. This means the lender will need to submit a package to HUD proving there are no material changes to the project that would keep it from being approved again. Since very few, if any projects in Orange County, have been approved in the past two years, a bottleneck is expected once the new process becomes effective.

Does the Delay Mean FHA is Going to Ease their Stance?

Maybe. In the FHA notification from this week, they announced they will provide better guidance on the new policy, including 1) they will offer additional leniency's to address the "difficult market" conditions, and 2) they will augment some portions of the Mortgagee Letter 2009-19, providing additional information and clarification. FHA also made it very clear that the Spot Approval program is extended through December 7. It actually sounds like FHA is realizing this is no time to make it any more difficult on first time home buyers than it already is.

FHA is Alive and Well in Orange County!

FHA financing currently makes up more than 25% of the closed transactions in Orange County. This is because of the flexibility FHA offers, especially in regards to low down payment and FICO scores as low as 620. With FHA loan limits in Orange County at $729,750, the program has proved to be popular not only with first time home buyers, but also move up buyers. There are not been a better time to purchase a home in Orange County in years.

Authored by Tim Storm, an Orange County, CA Loan Officer - Please contact my office at Home Point Financial for more information about an Orange County, CA home loan.  949-829-1846

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Comment balloon 2 commentsTim Storm • October 25 2009 01:41AM


I was wondering about HUD's spot approval process.  One would imagine that if a project isn't already approved (except for newer projects), that it's probably not going to get approved.  It's pretty easy to determine the non-approved projects, they often have wood siding exteriors, and termites holding hands. 

Posted by Alix Pinzon, (562)743-6086 (Open Mortgage, LLC NMLS # 2975) over 9 years ago

The Spot Approval is only for one unit and is an easier process than full project approval. Because of the ease, there was little reason for a lender to get a project approved. Most projects that are approved were approved when they were new so the builder could offer FHA financing. Also, there are a lot of projects in Orange County that were valued well beyond the FHA limits of $362,790 prior to 2008, so there was no reason to get projects approved prior to 2008 as well. While there are definitely projects that will not be approvable, for a number of reasons beyond deferred maintenance, there are a lot of projects that can be approved. Of course, there are some projects that are currently approved that will have issues that will keep them from getting approved.

FHA is supposed to be coming out with clarification regarding condo project approval in the next week or so. Hopefully it will not be as tough as initially thought.

Posted by Tim Storm, Orange County FHA and VA Home Loan Specialist (Fairway Independent Mortgage Corporation) over 9 years ago