FHA CONDOMINIUM PROJECT APPROVAL PROCESS
Mortgage Originators need to know – HRAP processing timeframes will significantly
increase
By Deni Archer
Senior Vice President
UHS America
As outlined in HUD’s Mortgagee Letter 2009-46(a), mortgage lenders have two condominium
project approval options. They are: the HUD Review and Approval Process (HRAP) and the Direct
Endorsement Lender Review and Approval Process (DELRAP). Under DELRAP, those FHA approved
lenders that have Unconditional Direct Endorsement (DE) authority and have staff knowledgeable in
reviewing condominium projects are authorized to review and grant FHA project approval status to
projects seeking such approvals. The “spot loan” approval process that had been very popular with
mortgage lenders was effectively eliminated by HUD/FHA in December 2009. This process had
enabled lenders to originate and close FHA loans on individual loan transactions involving
condominium units that were not located in an FHA approved condominium project.
In order to enhance FHA’s ability to process the large volume of condominium project approval
applications that began being sent to the Homeownership Centers (HOCs) for HRAP project approval
in 2009, the HOCs employed the services of UHS America. In this regard, a Condo Project Approval
Team was formed comprising of 6 full-time UHS America employees in the Philadelphia HOC. Once
established, the other three HOCs (Santa Ana, Atlanta and Denver) were advised to send all of their
HRAP condo project applications that they considered as their “overflow” (or work that could not be
done in a timely manner by HOC staff) to the Philadelphia HOC for processing by the UHS America
team. This arrangement has worked extremely well for all parties involved. HRAP processing times
were well within the 30 day target that was established by HUD and UHS America’s processing error
rate (as determined by QC reviews by HOC staff) was consistently below 1%. UHS America’s Team
has been processing over 1,000 project applications a month that past few months for HUD.
Unfortunately, the contract that UHS America had with HUD relative to condo processing expired on
9/30/11 and a new contractor is expected to begin operations soon. The impact of this change will be
that HRAP processing times will begin to significantly increase. This concern was brought to the
attention of those in attendance at four recent HUD condo processing training sessions by HUD
Headquarters staff. The new HUD condo contractor will have a huge learning curve and time-delays
in obtaining access to HUD’s systems for their new staff (who must all pass a background check).
In order to be proactive and address this major concern, UHS America has decided to retain their
Condo Project Approval Team and to solicit lenders interested in having their condo packages
screened & reviewed both for DELRAP and HRAP submissions. The goal will be to make a thorough
review of a condo package within 48 hours of receipt and, for HRAP applications, render one of the
following decisions:
*
*

READY TO SUBMIT TO HUD – package is complete & will be sent via Fed Ex to the
appropriate HOC
INCOMPLETE – a listing of items needed to bring the package to an approvable status will be
provided
NOT HUD APPROVABLE – an explanation will be provided as to why it is not approvable
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Having a well-prepared and documented HRAP submission package will significantly reduce
the number of initially rejected condo project applications by HUD which will ultimately benefit
the lender. Processing times for initially rejected condo project applications will be substantially
greater than what was experienced in the past.
For DELRAP submissions, UHS America will provide similar feedback to the lender so that
they can make their decision to approve or reject the condo project. It is anticipated that many
more lenders will begin processing condo project applications utilizing the DELRAP option once
HRAP processing times begin slipping. Having the benefit of such packages being reviewed by
UHS America’s Condo Project Approval Team will give assurance to the lender that they will be
compliant with any subsequent HUD reviews or audits. In addition, UHS America can assist
DELRAP lenders in performing the required 10% Quality Control review of all DELRAP project
approvals. This requirement is outlined in para. 4-3 of HUD’s Condominium Project Approval
and Processing Guide.
Finally, UHS America offers training in a variety of ways (on-site, classroom style, webinars,
etc.) for mortgage lenders to enhance their skills in meeting their underwriting responsibilities.
For more information visit their website at www.uhsamerica.com.
UHS America
4 Hutton Centre Drive
Suite 240
Santa Ana, CA 92707.
(714) 513-6960
UHS America (East Coast Office)
1 Penn Center - Suite 1160
1617 JFK Boulevard
Philadelphia, PA 19103
Contact:
Deni Arciniega Archer, SVP
(714) 415-3548
deni@UHSAmerica.com
www.UHSAmerica.com
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