On September 13, 2012, the U.S. Department of Housing and Urban Development issued Mortgagee Letter: 2012-18, which put in place temporary condominium project approval guidelines that modified the existing FHA condominium approval policy requirements.  The changes included, but are not limited to:

  1. a revised definition of proposed construction;
  2. a revised definition of newly converted condominiums;
  3. modifications to the loan eligibility and processing requirements;
  4. revisions to the definition of non-residential/commercial space;
  5. revisions to the acceptable percentages for total units in arrears in an association; and
  6. owner occupancy requirements, to name a few.

These and other changes were made because it was determined that certain policy adjustments were needed to address current housing market conditions.

Although Mortgagee Letter: 2012-18 was originally set to expire on August 31, 2014, it has been extended every year thereafter, including this year.  On August 24, 2016, U.S. Department of Housing and Urban Development issued Mortgagee Letter: 2016-13, which has further extended the provisions in Mortgagee Letter 2012-18 through August 31, 2017.

This additional extension is necessary so as to allow the U.S. Department of Housing and Urban Development additional time to complete its condominium rule-making process.

For additional information on this Mortgagee Letter, please visit www.hud.gov/answers or call the FHA Resource Center at 1-800-CALL-FHA (1-800-225-5342).