Mike Young

The streamlined k is a great tool but if only do the streamlined k and not the full 203k you run the risk of loosing some loans from time to time. Using a plan review is also a great tool because the plan reviewer or consultant can find things that if the appraiser found them would trip the streamlined k to a full 203k.

We just had one that was a streamlined k that became a full 203k. When I went to inspect it I found the home next to high tension tower. Agents beware. If you're selling a home next to HT distribution wires or more particularly a tower... think "yuk" and go for some other loan product. The guideline indicates there should be 10 feet from the HT easement to the house... you are okay... then it goes on to say it cannot be within the fall distance of a HT tower... that killed this loan.

Problem: the borrower had a home inspection... no one caught it. the borrower then paid for a pest control report (PCR), more money out of pocket. Then I get there and want a fee... I couldn't bring myself to charge my client in hopes they will use me on the new house they find.

I had something like this going on and the property had a HUD insured loan that went bad and since HUD already owned the home they waived the rule. The original loan should never have happened. If this scenario ever happens to you look to see if a HUD loan ever existed on the property... if so HUD might waive the rule. If it is a HUD foreclosure you will likely get the waiver as they already own the risk.

M

We just received a draw for one of my clients in five days including a weekend... that is 3 working days... that is fantastic for Wells Fargo... You rock. Whatever you are doing, keep it up. We in the 203k consulting and lending world appreciate your fine efforts in getting on top of that situation. We know you were hit hard and had to respond and you have... We are proud of you.

Last week I had a call from a Wells Fargo loan originator who told me they were now able to close them much faster than a month ago... it is now 35-45 days again... that is very reasonable in this market. Fantastic new when coupled with the news I just got a moment ago from my client who received his draw check in record time.

There are a lot of streamlined k's going on around us wow. I had no idea. As busy as we are on the full 203k doesn't come close to the activity in the full 203k. I appreciate all the plan reviews for the lenders who want to keep their deals in the Streamlined k mode.

Just a reminder. The k can start out a streamlined k but if you fail to disclose all of the issues with the home you may find it becomes a full 203k. I had one the other day that went up to closing when they received the appraisers report that disclosed some of the work as "structural". The lender called me in a panic as they now had to have a full 203k.

Some lenders only do the Streamlined k and they for the most part have discovered it is cheap insurance to have a plan review. It just makes good sense. There are no surprises. Luckly for the lender situation above that they do the full 203k as well. Imagine if they only did the streamlined and this situation came up... the deal would have gone to another lender and the entire process would start all over again delaying the closing.

What I'm finding in my own business is quite often a borrower who has a trade fails to disclose problems in his own trade with the idea of fixing those things himself and saving money... he/she borrows less money. Then the appraiser gets out there and sees that these issues weren't addressed and has no choice but to turn it in... it becomes a full 203k. By having a Plan Review prior to the appraiser's visit will put those new items into the scope of work and the streamlined k will remain a streamlined k.

...by the way we were able to turn the full 203k around in a day for them. That is the other myth about the full 203k. They don't have to delay closings. In fact if you use one of our group of consultants the inspection and subsequent report will NEVER be the reason for delaying the closing. Good luck with your next k.

M

RE investors looking for a safer investment. Join the many 203k seminars given all over the USA. They are intended to provide information to people who want to buy using the 203k. Believe it or not there are quite a few buyers who come to those meetings and want to purchase a home with no money down. There are several ways to do that... one it YOU provide the home. YOU can borrower money to fix up a home provided YOU have an exit strategy. The borrower with no down payment is that exit strategy. You rent to them for a period of time and charge market rent plus an amount that is bing used as their down payment. If they back out YOU keep that money too. In the meantime HUD allows this program provided YOU can prove that they are paying more than market rent. They continue cleaning up their credit while accumulating the down payment they need to get a 203b loan.

RE agents and broker should love this program... bring your investors to the seminars as they are litterally in every state in the union. Sell them a home, then write the contract to sell it to someone else in the room once they accumulate the down payment. Two commissions on every house you sell. you are seeding your future sales book. Go get 'em.

Contractors who are involved with the 203k will be relieved to know tht the slow pay from our best lenders is coming under control. I'm happy to report that while the sudden burst of 203k business put everyone behind the eight ball with regards to paying out draws it seems to be coming under control. I know they all have been working to ease the situation but hang in there I'm already seeing a marked improvement.

The major lenders in this program have made recent changes in the way they handle draw request that is clearly making a difference. Just relalize that if you have had some delays in the past they are getting better and they should be totally back to normal in a few more weeks.

If you are new to the 203k you likely will not see a problem. Remember that while the Streamlined k does provide money up front to help you with material expenses the big box stores like Lowes and Home Depot do have programs in place that can save you money and carry you between draws. My web site will have more information on these programs but if you need more info before that happens just ask. They both will take your bid request and provide you with costs and if you take them the entire bid request so they can price it for you and it is greater than $2500 they both will offer you greater discounts for buying from them. These additional discounts could be as much as 25-30% on material costs so it is worth it to look into it. Home buyers can take that list in for quote as well to save money on the materials.