On November 6, 2009, HUD issued two (2) new Mortgagee Letters, specifically 2009-46A and 2009-46B. Mortgagee Letter 2009-46A (ML09-46A) is a temporary direction to address market conditions and expires on December 31, 2010. Mortgagee Letter 2009-46B (ML09-46B) is the new permenent guidance for FHA’s condominium project approval process and replaces the direction provided in Mortgagee Letter 2009-19 released June 12, 2009.

ML09-46A will apply to “… all FHA case numbers assigned on or after December 1, 2009 through December 31, 2010.” ML09-46B is “… effective for all case numbers assigned on or after December 7, 2009, except as noted.” And, for all previous condominium approvals issued by HUD, “…they will expire two years from the date of placement on the list of approved condominiums. Further participation in the program after the two-year period has expired will require recertification …”.

Under ML09-46A, the concentration of FHA insured loans within an approved project will be increased to 50% and may be further increased to 100%, provided certain conditions are met. Under ML09-46B the maximum concentration will be reduced back to 30%.

Under ML09-46A the pre-sale requirement is temporarily reduced to 30%, and the use of Spot Loans is allowed through February 1, 2010. Under ML09-46B the pre-sale requirement is raised back to 50% and the use of Spot Loans is eliminated.

There are a number of other issues to discuss and review in these new Mortgagee Letters. I will do more research on each and provide additional information in the coming days.