If you are one of the many Boston Real Estate home buyers trying to get a loan these days, it may feel like you are in a maze of paperwork, searching for copies of bank statements, tax filings and 401k holdings needed by the bank to just begin processing your mortgage request. Many home buyers do not realize that the bank must also approve the home they are looking to buy. This may not hold much sway for you suburbanites, but Boston is booming with homes that may not be approved for FHA financing. Here are some of the things Bank of America will require to approve local projects (two units or more) for FHA loans.
-Projects must be covered by hazard and liability insurance and, when applicable, flood insurance.
-Right of first refusal is permitted unless it violates discriminatory conduct under the Fair Housing Ace regulation in 24 CFR 100.
– No more than 25 percent of the property’s total floor area in a project can be used for commercial purposes. The commercial portion of the project must be of a nature that is homogenous with residential use, which is free of adverse conditions to the occupants of the individual condominium units.
-No more than 10 percent of the units may be owned by one investor. This will apply to developers/builders that subsequently rent vacant and unsold units. For two and three unit condominium projects, no single entity may own more than one unit within the project; all units, common elements, and facilities withing the project must be 100 percent complete; and only one unit can be conveyed to non-owner occupants.
-No more than 15 percent of the total units can be in arrears (more than 30 days past due) of their condominium association fee payment.
-At least 50 percent of the total units must be sold prior to endorsement of any mortgage on a unit. Valid presales include an executed sales agreement and evidence that a lender is willing to make the loan.
-At least 50 percent of the units of a project must be owner-occupied or sold to owners who intend to occupy the units. For proposed, under construction or projects still in their initial marketing phase, FHA will allow a minimum owner occupancy amount equal to 50 percent of the number of presold units (the minimum presales requirement of 50 percent still applies).
-Legal phasing is permitted for condominium processing.
-Projects consisting of three or less units will have no more than one unit encumbered with FHA insurance.
-Projects consisting of four or more units will have no more than 30 percent of the total units encumbered with FHA insurance.
-A current Reserve study must be performed to assure that the adequate funds are available for the funding of capital expenditures and maintenance.