Fillable FHA Single Unit Condo Approval Checklist (Paramount Residential Mortgage Group, Inc.)

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FHA Single Unit Condo Approval Checklist (Paramount Residential Mortgage Group, Inc.)

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FHA Single Unit Condo Approval Checklist
FHA Single Unit Approval Checklist Page 1 of 4 Revised 11/23/20
Checklist to be used for reference purposes only
Refer to 4000.1 to ensure Project meets current requirements
Borrower Name: _______________________________________________________________________
Project Name: _________________________________________________________________________
Address: _____________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
Loan Number: _________________________________________________________________________
Max LTV 96.5% with Accept from TOTAL Mortgage Scorecard
Max LTV 90% with manual underwrite (including downgrades)
Condo project has a Certificate of Occupancy that was issued at least one year ago or has been
occupied
Project has five or more units
Is not a Manufactured Home
Does not have cooperative ownership
Not condominium hotel or condotel
No mandatory rental pooling agreements that require Unit owners to either rent their Units or
give a management firm control over the occupancy of the Units
Not a timeshare or segmented ownership projects;
Not a multi-dwelling condominium (more than one dwelling per Condominium Unit)
Not a houseboat project
Not continuing care facility
Not in a Coastal Barrier Resources System location
Not subject to adverse determination for significant issues as identified by FHA
Condo is not in an Approved Project or in unapproved phase of an Approved Project on HUD’s
Approved Condo List at the time of case number assignment (can be expired or rejected for
minor reasons)
Meets following percentage of FHA-insured loans in projects (HUD may suspend issuance of
case numbers where FHA concentration is greater than 10%)
• For projects over 20 units, maximum percentage is 10%
• For projects less than 20 units, maximum number of FHA mortgages is 2 mortgages
FHA Single Unit Condo Approval Checklist
FHA Single Unit Approval Checklist Page 2 of 4 Revised 11/23/20
Owner Occupancy of at least 50% of the total number of units
• The numerator of the calculation for a multi-phased Condominium Project includes
the total number of the following Units in the first declared Legal Phase and
cumulatively in subsequent Legal Phases, or for a single-phased Condominium
Project, all of the following Units are included in the numerator of the calculation:
• any Unit that is occupied by the owner as his or her place of abode for any
portion of the calendar year and that is not rented for a majority of the calendar
year;
• any Unit listed for sale, and not listed for rent, that was previously occupied by
the owner as his or her place of abode for any portion of the calendar year and
that is not rented for a majority of the calendar year; or
• any Unit sold to an owner who intends to occupy the Unit as his or her place of
abode for any portion of the calendar year and has no intent to rent the Unit for
a majority of the calendar year.
• The following units are included in the denominator of the calculation for a:
• multi-phased Condominium Project, the total number of Units in the first
declared Legal Phase and cumulatively on subsequent Legal Phases; or
• single-phased Condominium Project, all Units.
• A Unit owned by the builder/developer is not an owner-occupied Unit.
Project's legal documents have been recorded in accordance with state and local law
Control of the Condominium Association has been transferred to the Unit owners and the
Covenants, Conditions, and Restrictions (CC&R) have been recorded
Status of Transfer of Control is documented and recorded CC&Rs have been submitted.
The Condominium Association maintains separate accounts for operating and reserve funds
There is a reserve account for capital expenditures and deferred maintenance that is funded
with at least 10 percent of the aggregate of 12 months of Unit assessments, unless a lower
amount is deemed sufficient based upon an acceptable reserve study
No more than 15 percent of the total Units are Units in Arrears (does not include late fees or
administrative expenses)
No financial distress event involving the Condominium Association or the builder/developer
within the past three years
• Financial distress is defined as:
o sought protection under bankruptcy laws
o been placed into receivership (mandated or voluntary)
o been subject to foreclosure or any seizure of assets by creditors or
o offered a Deed-in-Lieu (DIL) of Foreclosure
FHA Single Unit Condo Approval Checklist
FHA Single Unit Approval Checklist Page 3 of 4 Revised 11/23/20
Any individual owner or related party concentration does not exceed: 10% of the units in
projects with 20 or more units or in projects with less than 20 units, unit owner does not own
more than 1 unit and no related party owns a unit
• On a multi-phased Condominium Project, the Individual Owner Concentration is
calculated based on the total number of Units in the first declared Legal Phase and
cumulatively on subsequent Legal Phases; or for a single-phased Condominium Project,
all Units are used in the denominator when calculating the Individual Owner
Concentration, except that unoccupied and unsold Units owned by a builder/developer
are excluded from the numerator and denominator in the Individual Owner
Concentration calculation.
• Related Party includes but is not limited to:
o an individual serving as the Unit owners’ officer, director, or employee; or
o A Unit owner’s direct parent, subsidiary, or any related Entity with which the
Unit owner shares a common officer or director.
Master or blanket Hazard Insurance policy in place for the entire Condominium Project in an
amount equal to at least 100 percent of the insurable replacement cost of the Condominium
Project, including the individual Units in the Condominium Project
• Any policy with a coinsurance clause includes an agreed amount endorsement or
selection of the agreed value option
• Any pooled insurance policy satisfies the insurance coverage standard for each
Condominium Project insured under the policy.
HO-6 Policy (if Master insurance is not walls-in)
Liability Insurance for the entire Condominium Project, including all common areas, elements,
public ways, and all other areas that are under its supervision, in the amount of at least $1
million for each occurrence
If more than 20 Units, Fidelity Insurance for all officers, directors, and employees of the
Condominium Association and all other persons handling or responsible for funds administered
by the Condominium Association. Insurance coverage is either:
• The greater of three months of aggregate assessments on all Units plus reserve funds; or
the minimum amount required by state law; or the maximum amount permitted by
state law
• If the Condominium Project engages a management company, must demonstrate that
they specifically meet the standard for both the Condominium Association and the
management company
If units in a Condominium Project are located in a Special Flood Hazard Area must meet the
Flood Insurance requirements in the Condominium Project Approval section
For projects with Commercial/Non-Residential Space, must verify financial independence by
review of following documents:
• a current year budget approved by the board(s)
• a year-to-date income and expense statement dated within 90 Days if the prior year to
date actuals are more than 90 Days old
FHA Single Unit Condo Approval Checklist
FHA Single Unit Approval Checklist Page 4 of 4 Revised 11/23/20
• an income and expense statement for the previous year’s actual year end results and
• a current balance sheet dated within 90 Days prior to the date of submission
If mixed-use project, the Commercial/Non-Residential use may not exceed 35% of the project's
total floor area
• Commercial Non-Residential Space refers to:
o retail and commercial square footage (excludes Live/Work Units)
o multi-level parking garage square footage that is separate from multi-level
parking garage square footage allocated to residential Unit owners
o building common areas not reserved for the exclusive use of residential Unit
owners and
o any square footage that is owned by a private individual or Entity outside of the
Condominium Association
• Residential Space refers to floor area allocated to:
o all Unit square footage
o all building common area square footage exclusively for the use of residential
Unit owners and
o all parking garage square footage allocated to residential Unit owners
• Parking lot square footage is not considered Residential or Commercial/Non-Residential
Space
• Total Floor Area refers to all Residential Space and Commercial/Non-Residential Space
Live/Work Unit does not contain more than 49% Commercial/Non-Residential Space
If project is under a Leasehold Interest must meet the following requirements:
• The Condominium Association must be the lessee under the lease
• The lease of the Common Elements provides that a default of the Condominium
Association does not result in a disturbance of any rights of the Unit owners
• The lease provides that the Mortgagee receives notice of any monetary or Non-
Monetary Default by the Condominium Association and is given the right to cure
any defaults on behalf of the Condominium Association
• The lease provides for the payment of taxes and insurance related to the land, in
addition to those being paid for the improvements
• The Association must not be in default under any provisions of the lease.
• The lease does not include any default provisions that could result in forfeiture or
termination of the lease except for nonpayment of lease rents.
• The Condominium Project must comply with standard HUD Leasehold guidance
The Condominium Project or Condominium Association is not subject to Litigation that relates to
the safety, structural soundness, habitability, or functional use of the Condominium Project
Project not subject to any other litigation risk not fully covered by insurance
Please send all completed documentation to CondoReviews@prmg.net.
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FHA Single Unit Condo Approval Checklist (Paramount Residential Mortgage Group, Inc.)

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Completed 19 August 2021

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