VA Changes Approval Process for Site Condos in Michigan

Filed in Codes and Standards, Housing Finance by on May 29, 2018 6 Comments

In an important victory for NAHB and Michigan home builders, the Department of Veteran Affairs (VA) has announced a major change that will waive VA’s site condo approval process for single-family detached homes in the state of Michigan.

The vast majority of single-family detached homes in Michigan are built as site condos and are subject to the VA’s condo approval rules which unnecessarily burden veterans and those serving in the armed services applying for a VA loan.

A site condo is defined as a single-family totally detached dwelling (no shared garages or other attached buildings) encumbered by a declaration of condominium covenants or condominium for ownership. Historically, many single-family developments in Michigan have been built as site condos. Since the developments were entitled as condos, they were subject to VA’s Condominium Approval and Processing.

Effective immediately, Michigan builders will no longer have to get VA approval for a site condo project. In short, applications for a VA mortgage on a site condo property in Michigan will now be processed like mortgages on single-family detached homes.

The VA had received many complaints from lenders, builders and borrowers during the past several years regarding its cumbersome condo project approval requirements for site condos. The problem has been particularly acute in Michigan, and NAHB worked closely with the HBA of Michigan and the VA to roll back this rule and simplify the home financing process for the state’s deserving veterans.

The VA’s decision is the culmination of a nearly year-long effort working with the agency to resolve this issue, and it’s yet another example of the value of NAHB membership.

The VA circular announcing the change is here. For more information, contact Curtis Milton at 800-368-5242 x8597.

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Comments (6)

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  1. christopher mustello says:

    does this new change apply to Miami dade in florida

  2. Emily says:

    What documentation is being obtained for proof the site condo meets VA requirements as stated in the circular?
    e. Lender will provide letter on company letterhead in WebLGY that Site Condominium meets
    VA requirements as stated in this circular in order to satisfy item #20 Other
    Conditions/Requirements on the NOV.

    • NAHB Now says:

      Emily, if you are referring to the Lender’s Notice of Value, the Other Conditions/Requirements as stated in the Notice of Value is referring to any miscellaneous items the appraiser may note during the inspection that’s necessary to ensure this home meets VA’s requirements. In most cases, item number 20 will be left blank or marked as N/A. In short, the Other Conditions and Requirements section would have to address any and all deferred maintenance the appraiser may note during an inspection which the lender will have to put on their letterhead to ensure they (the deferred maintenance items) have been addressed and the home is in habitable condition.

  3. Marsha Cohen says:

    How does this new rule affect condo projects that have a mix of attached and detached units included?

    • NAHB Now says:

      This rule only applies to Site Condominiums. A Site Condo is defined by the Department of Veterans Affairs as a single family totally detached dwelling (no shared garages or any other attached buildings) encumbered by a declaration of condominium covenants or condominium form of ownership. Also, this is a regional variance for the state of Michigan only. All other geographical areas are unaffected by this change.

      If your project is a mix of both attached and detached units, then the project may be held to the stricter of the requirements as attached condos would have to go through the standard condo approval process.

      If you have further questions, contact Curtis Milton 202-266-8597.

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