Written By: Glenn Michaels, Op-Ed Writer
The more I read the new Single Family Handbook (SFH) 4000.1 versus the old handbook HUD – 4155.1 and previous Mortgagee Letters there are changes made and numerous clarifications made. The changes and clarifications make it an easier program to utilize.
The FHA 203(K) program always had a regular program and then the FHA added a Streamline 203(K) program. Now FHA has changed the names to the program. They are now referred to the “standard” and “limited” 203(K) program.
The Standard 203(K
: May be used for remodeling and repairs . There is a minimum repair cost of $5,000.00 and the use of a 203(K) consultant.is required.
The limited 203(K) may only be used for minor remodeling and non – structural repairs. The Limited 203(K) does not require the use of a 203(K) consultant, but a consultant may be used. The total rehabilitation cost must not exceed $35,000.00. There is no minimum rehabilitation cost.
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The 203(K) loan can be used in conjunction with:
a. 203(K) loans for disaster victims.
b. Energy Efficiency Mortgage
c. Solar and wind Technologies effective for endorsements on or after March 14, 2016.
The property must be an an existing property That has been completed for at least one year from the case assignment date. The lender must request a copy of the Certificate of Occupancy. (CO) or equivalent0
All properties must pass the health and safety or security issues. If a property does not pass the health and safety issues or security issues the mortgagee may use a 203(K) loan to pass the health and safety or security issues.
The program is eligible for the following property types:
• A one to four unit single family structure.
• An individual condominium unit in An approved condominium project.
• A site condominium Unit.
• Manufactured Home
• Mixed use properties with one to four residential units with 51% of the building used for residential use and the commercial space will not affect the health and safety of the occupants of the residential property and
• A HUD Real Estate Owned (REO) Property.
The 203(K) program is available for borrowers that are purchasing or refinancing a property with rehabilitation
There are approximately forty pages in the new handbook referring to the 203(K) and I highly suggest all underwriters go to page 349 in the new guide to learn more about the FHA 203(K) program.
About The Author
Glenn Michaels - As an op-ed writer, Glenn Michaels is a mortgage underwriting instructor for CampusUnderwriter (www.MortgageUnderwriter.org). As a BBA & FHA DE Underwriter, Glenn is a Pace University graduate who also graduated from New York University’s School of Mortgage Finance. Glenn has conducted numerous training classes and has worked in the mortgage banking industry for 38 years.