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One frequently asked question about the VA loan process involves the inner workings of VA condo approval. VA mortgages aren't just for suburban homes, they can also be used for condos on the VA approved list.

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VA Condo Project Approval

December 9, 2011 - One frequently asked question about the VA loan process involves the inner workings of VA condo approval. VA mortgages aren't just for suburban homes, they can also be used for condos on the VA approved list--any borrower wanting to purchase a condo unit with a VA guaranteed loan must purchase a unit on the "approved" list or have it added to the list if that project meets the requirements.

The VA Lender's Guide has a list of procedures to get a condo project approved if it is not already on that list.

According to the VA, "For condominium projects, the lender/sponsor must provide the following to the VA Office of Jurisdiction:

 a written request for VA-approval, and
 a copy of the condominium's organizational documents."

It's the lender's responsibility to submit documentation to the VA on the borrower's behalf and unfortunately it's not a simple matter of sending in the organizational documents and waiting for the VA's response.

Condo documents must be reviewed to insure compliance with VA regulations. They must be "approved by VA before any lots or units in the project are eligible for VA loan guaranty."

When a project has been approved, the VA may have a list of "special conditions/requirements which must be met prior to VA guaranty of an individual loan in the project". There may be a pre-sale requirement, and restrictions based on the completion of the project. Those can include minimum VA requirements for common areas and other issues that could affect condo conversion or construction.

Can a condo project be denied VA approval or have the approval process suspended based on "deviations from VA requirements"? Definitely. Grounds for denial include incomplete documentation, inaccurate or inconsistent information submitted and other factors spelled out in the VA regulations.

A condo project that is denied can be revisited, pending receipt of additional information required by the VA.

VA rules allow favorable treatment of condo projects with prior approval from another government agency. According to the Department of Veterans Affairs, "Generally, projects already approved by the Department of Housing and Urban Development (HUD) or the United States Department of Agriculture (USDA) do not need further VA review."

"Upon receipt of evidence of HUD/USDA approval, such as a copy of the HUD/USDA approved project list or the project approval letter, the VA office of jurisdiction adds the project to the nationwide VA list without issuing a formal VA approval letter."

However, some condo projects approved by other agencies may not be acceptable to the VA, when they do not comply with VA requirements--the rules don't permit exceptions in these instances. "In those cases, VA notifies the lender as soon as practicable that it will not guarantee loans in the project."

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