Is the 203K still a good option?

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Services for Real Estate Pros with Atlanta Communities 349601

With so many distressed and vacant homes on the Atlanta market one would think that the FHA 203K is a great solution for buyers who need (or simply want) special financing that includes fixer upper funding.  Agents may use it as a tool to place buyers in affordable homes and contractors see it as an opportunity for business in a slow economy.  Sounds like a win-win, doesn't it?  Unless you speak to trade professionals who have been involved in the program.  Once again, red tape and government micro-management may be creating more problems than it solves.  According to one Marietta contractor, who used to specialize in 203K renovations and is registered with FHA as a 203K Consultant, the program is not worth the effort that it requires. 

From his experience, many of the program participants either misunderstand or choose to abuse the program.  The goverment requires that the contractor front the financing for the project and is reimbursed as the bank and the borrower sign off.  Repayment may take weeks or months and many contractors cannot afford to carry the costs while the bank and borrower decide payment is due. 

To add insult to injury, he went on to add that many borrowers would attempt to "extort" products and/or finishes that were not covered or a part of the program by threatening to withhold approval and thereby prevent payment.  He found that while the 203K program was about half of his business, he spent 90% of his time appeasing clients and chasing money.  Meanwhile, the other 50% of his business focused on traditional remodeling and insurance remediation was far more profitable and only getting 10% of his time. 

He made a decision at the end of the last to turn down future 203K projects.  He confirmed that by focusing on the lower mainentance, higher profitable jobs and refusing the others he was able to build his business and his bank account. 

Hamp 2.0 is scheduled to roll out to mortgage companies early this year. And while is promises to help those still in their homes, is there a product that is less painful than the 203K and will help to encourage sales of distressed and vacant properties throughtout metro Atlanta?  Please share your successes, failures, and thoughts...

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