I NEED HELP!
While working with my qualified buyer and pulling up available homes located in the Oakland, CA area and in his price range ~ we ran up on a home that my buyer is interested in! YEAH! Not a problem. The description of the home stated that it is 203K Program qualified.
So not knowing what this program is about, I began to look it up so that I would know what it is and how would 
my buyer go about getting qualified under this program.
I checked with some of my resources and all roads pointed to these groups where the experts are.......
To the experts: What is 203K Program, how does it work, who qualifies for it and what are the restictions. Oh how how long (estimated) does it take to get it approved. Does the repairs have to be done before or can they be done after close of escrow and how does that all work.
Meanwhile my buyer had his sights on another property that is a REO, in somewhat bad shape since the roof is leaking and we're not sure what other moisture damage is going on with the property. But the property has great potential and he wants to see if the 203K Program will work with that property although it is not mentioned in the description. Who does it work, is it with any property that need rehab? Or is there something else we need to do to find out if the property would even qualify?
I would appreciate as much information on this program as I can get, so I will know how to handle my buyer with these type of properties and for future use.
**********
Thought I would update this post to add in what I have found out about 203K Program. Since this was my first encounter with this program... I didn't know all the in and out of the program:
Here's a small checklist:
- All work must be done by licensed contractors (not the homeowner).
- The buyer is responsible for getting the general contractor lined up.
- The repairs need to estimated not completed before the loan closes. The repairs are done after close of escrow- so there are no delays in the closing.
- Repairs are for anything but luxury items (no pools--spas, etc). The FHA will focus on Health and Safety repairs and Termites which will need to be done first.
- Funds are dispersed as repairs are completed. Monitored by FHA Consultant
- PITI payments can be part of the loan if the property is uninhabitable until repairs are completed.
- The is no class for the buyer on this program but a loan officer can educate buyer of the steps. May take about 1 hour to go over the rehab program and the credit approval flow
- The pre-qualification for formal credit takes about 48 hours unless Underwriting gets back up (ya, that will happen in today's market). Credit requirements - 600+ FICO score
- This is a full doc loan:
- Things needed from borrower:
- 2 months bank statements (all pages)
- 1 months pays stubs
- source of funds information or documentation proving it
- 2 years w2'w (1040"s if self employed or commissioned)
- $18 for the tri merg credit report
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GO TO THE FHA SITE AND YOU'LL LEARN ABOUT THE PROGRAM. YOU NEED ESTIMATES FOR THE WORK THAT NEEDS TO BE DONE, THAN THAT MONEY IS ESCROWED. REPAIRS HAVE TO BE COMPLETED IN A CERTAIN TIME.
DEBRA
Debra ~ thank you, I did and there was some information there and then I did a search and found out a little more. Then I was pointed towards an expert and he gave me great information.
Wow in REO and you do not know how a 203k works. The product has been out there forever, how long have you been in business?
E Jeffrey ~ thanks for the question. I am NOT in REOs. I have sold any REOs and I have no listed any either. This 203K is a old loan program and from what I hear is not used that much at least in my area. I had heard of it but I have never worked one and just wanted to make sure I get the information and resources so that I can tell my client as much about it as I can find out.
I don't do loans and have never had the experience of doing a 203K or been asked about it. Haven't read the book "203K for Dummies" and everything has a first time, well this is mine. I do not claim to know it all and I do not mine asking. Do you have any suggestions of where I can find out information on the subject?
I have since I posted this found out a great deal and have also found a FHA consultant that is helping my client get qualified. I did this post in an effort to educate myself as well as some others that might need to know this information. Isn't that what the Rain is about?
I have been in the business for 5 years. Thanks for your comment.
Wow Rosemary -
You did some great gathering of information here!
E Jeffrey - that was a little harsh wasn't it? Rosemary works in a little place we like to call JumboLand - You might know it as California. FHA was and still is not able to do much for many of our households here. $362,790 doesn't buy much here. That might all change soon but for now - even people who have been around a while (like myself) haven't used FHA much.
Mike, thanks for the defense. I would only add that I work hard in this little jumboland. I do not assume to ever know it all. That is why I turn to people like you that if you don't know you will help me by researching and sharing. I appreciate you and others that have helped me along the way and I hope it will continue. Speaking of the $362,790 I hear we are going to get a lift to $417,000 soon. Yeah!
E Jeffrey I still love ya! I've been called a dummy once or twice, but then I've been called smart and helpful in other cases so its pretty even, I think.
i guess i forgot california pricing, sorry, my bad, thanks for calling me on it Mike!
E Jeffrey ~ your question (harsh as it was) reminded me to add the update of what I had found out about the 203K so that I could possibly help someone else that is looking to purchase REOs or someone (in California) that maybe new to 203K rehab program and could use the information to possibly use or help a client. So in a weird sort of way, I appreciate the "push". I hope that the information will be valuable to someone.
Happy day.
Rosemary, do a search on NAMP-National Association of Mortgage Processors. I received an informational e-mail today discussing this topic.
Jacqueline ~ Thank you very much! I will check it out.
I've been looking at several Rehab products for one of my clients. Scott McKay made a blog post on this issue the other day. I've also got an alternate program that may work. I'll send info as soon as I have it.
Kate ~ thank you. I think we will using these other options a lot more in 2008 than in the past years. I would appreciate any update on alternate programs.
the streamline k is a lot easier to deal with when possible.
Jay ~ thank you. I check it out on www.hud.gov and it sounds like something one of my clients can use. The repairs needed are not major enough for the 203K program. Thanks a bunch. I will update my post to include the link to the Streamline K program.
Rosemary,
you may be able to get more detailed info at www.hmbireo.com ; I don't think that this contractor is in your area, but there is a link to the 203k for ya!
Michele ~ thanks for the link. I found quiet a bit of information on the hud site. I will check this one out too. My buyer is excited at the possibility.
Diana - check with a title person on that. They will be able to explain it more clearly than me. In fact, I probably cannot explain it. Or go to the FHA group and ask one of the experts there. Sorry this is something that I am getting into so I don't want to guess for you. I hope my suggestions are in time. The FHA loan officer should really know how they put it on the HUD and how it affects the borrower.
Please up me or this post with your findings. Good luck.
hi, my name is Felipe im a financial planner. I just wanted to share some financial concepts with you. let me know if you'd be interested in chatting!
Does anyone know whom does the FHA 203k Loans on the Wholesale side of things, I am having problems finding a lender.
-Bryan
Rosemary,
If you are on LinkedIn, look up a lady by the name of Lindy Pond. As far as 203(k) is concerned, she is *the* expert. She was the 203(k) guru at American Home Mortgage and before that she was with Columbia National before AHM bought them. From what I understand, she was responsible, either directly or indirectly, for training -- at one time or another -- hundreds of loan officers to do 203(k) loans. If you can find any former AHM employees there in CA who were certified to do 203(k)'s such a person would be a good one to have in your rolodex as the 203(k) training was comprehensive. I was getting ready to take the certification test there myself, but alas, good ole AHM fell victim to the liquidity crisis before I could do so.
Best of luck!
Juan Boldizsar
Marilyn, Your offer is for the amount of money your buyer wishes to pay for the property, with proper provision for closing cost concessions and Nehemiah money. I would suppose that for your mortgage congingency you would use a figure that reflects 97% of the purchase price plus cost of repairs.
I would suggest that you get your buyer in touch with a 203(k)-qualified loan officer and work things out before you submit the offer.