FHA 203k Investor program

By
Home Inspector with 203kOnLine.com, covering the USA S0289

HUD FHA 203k Investor program

This blog post will tell you about investor programs that include renovation money.

What are the basic investor programs Renovation loans for investors

This is a program that lets investors "flip" properties, the same thing that FHA was condemning just a short time ago... like yesterday. Wow, I've received lots of calls and emails asking me what I thought of it.

  1. it hasn't happened yet
  2. when it does be ready for more work
  3. we already have an investor program for those investors who are savvy and know how to use OPM (Other Peoples Money). 

I thought that more people should have been sent to jail in the 1990's when they investors ruined a great program by committing fraud but we see fraud all around us and many times by the very people who were supposed to be the lawmakers. I watched a couple of investors in the 1990's who were literally making the market go up by selling property to each other at inflated prices to create "comps". I had been hired to do an appraisal once when I caught it. When I turned my report in and reported what I saw in that market the lender just stopped using me and chose to use another appraiser who could be fooled more easily. 

In any case getting the investor program back along with some legal flipping, should help the economy. We have been pushing to get them back for over five years so I'm glad to see someone in the government has finally agreed with the consultants around the country to get this going. If the "escrow commitment procedure" comes with it we will really have a great thing going. 

The escrow commitment procedure was where the investor could actually put a loan in place for 96.5% of the "after improved" value when the purchase the home. 

Example: Purchase price - $250,000, renovation cost - $150,000 but say it is worth $550,000 once the work is complete. The ECP would allow the investor to put a loan in place for $550,000 less 3.5% down. This is an FHA guaranteed loan and, as you should already know, all FHA loans are assumable so it is no stretch for the buyer to assume this loan once they qualify for the loan and put their 3.5% down payment in place.

The sweet thing is that there is no new appraisal, and the buyer merely waits for the construction to be completed then moves in. The loan assumption can happen when the work is being completed and closed upon proof of that completion. Investors using this program would actually start marketing the property during the construction phase to limit their carrying costs during the course of construction. 

Important renovation loan for investors available right now

We already have an investor loan program with the FannieMae HomeStyle loan program. Investors can purchase a property with a minimum down payment, fix it up and either sell it or keep it. 

What do I think about the FHA investor program? I'll believe it is back when I see it, they have been telling us it would happen for so long now and it is like crying WOLF. It is time they did it as it will stimulate the economy. If you cater to investors, you should be telling them about the program. If you want to hold some investor education seminars we are happy to work with you in that regard.

Related blog posts

Is there a renovation loan for investors?

203k Basics

Posted by

Mike Young, 203k Team Leader    Mike ready for your 203k order

To learn more about the FHA 203k loan program go to www.203kOnLine.comWhat is your fee? 

Got a 203k project giving you "fits" contact www.203k911.comIf you are looking for quality 203k software for consultants to speed up the underwriting process..

Skype name: the203kconsultant

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Rainer
321,561
Jack Mossman - The Nines Team at Keller Williams in Stockton
The Nines Team At Keller Williams - Stockton, CA
The Nines Team at Keller Williams in Stockton

Mike - Sometimes taking the high road gets you nowhere in business, but everywhere in reputation and integrity.  Eventually the "what-goes-around-comes-around" says will play out ... sometimes it just take a lot longer than we expected. Your are an exceptional man and a valued resource.

May 19, 2013 02:01 AM #1
Rainmaker
2,849,478
John Pusa
Berkshire Hathaway Home Services Crest - Glendale, CA
Your All Time Realtor With Exceptional Service

Mike - You are right, some poeple took advantage of a good program and committed fraud. Thanks for the information about FHA 203K investor program. Excellent blog.

May 19, 2013 03:03 AM #2
Rainmaker
614,536
Mike Young
203kOnLine.com, covering the USA - Las Vegas, NV
FHA 203k Consultant 916-758-1809

Jack, you said a mouthful, thanks for stopping by. M

John, good to hear from you as well, thank you for stopping by. M

thank both of you for your kind words, M

May 19, 2013 05:32 AM #3
Rainmaker
647,169
DeeDee Riley
Lyon Real Estate - El Dorado Hills CA - El Dorado Hills, CA
Realtor - El Dorado Hills & the Surrounding Areas

This is great information Mike!  I'll have to think who I can share this info with!  I have a few people!!!

May 19, 2013 04:11 PM #4
Rainmaker
614,536
Mike Young
203kOnLine.com, covering the USA - Las Vegas, NV
FHA 203k Consultant 916-758-1809

Hey DeeDee, how are you, It could be big, with only a 10% down payment for investors. it should open up things a bit if we get the word out as you say. Good seeing you, M

May 19, 2013 11:25 PM #5
Rainer
162,575
Alan Harris
Keller Williams Realty - San Diego, CA
San Diego Real Estate Broker with Keller Williams

Hello Mike,

Thank you for this very informative post. Best of luck to you and have a great week!

May 20, 2013 02:56 AM #6
Rainmaker
5,502,018
Roy Kelley
Realty Group Referrals - Gaithersburg, MD

Many of us would love to see a 203(k) program for investors. Have you blogged about the Fannie Mae HomeStyle program?

 

May 24, 2013 12:52 AM #7
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Mike Young

FHA 203k Consultant 916-758-1809
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