Some twenty five years or so ago HUD introduced the 203K Rehab loan. It seemed to have a slow start but survived time and revision to become a very popular program today. Fannie Mae and Freddie Mac got into the act recently with the HomePath and HomeStyle rehab loans for properties owned by them (usually foreclosures). Now more and more banks, mortgage brokers, and realtors are pushing these loans to their prospective clients looking for a deal or unable to qualify for a new home. But are these specialty loans boon or bane?
I think the evidence clearly points to the fact that these loans are a boon to the housing industry and a ‘bargain’ for the buyers, but there are some pitfalls to beware of. From our experience some brokers and/or realtors are not fully versed on the product they are promoting and misinformation is provided, sometimes leading to unreasonable expectations by the buyers. In other cases the rules and regulations of the particular loan product being used are not clearly communicated to the buyer or contractors sometimes leading to confusion and distrust. And in still other cases the contractors do not read the documents as carefully as they should before signing them leading to ‘shock and awe’ when they are informed afterward of such provisions as no funds up front, no change orders without prior approval of the lending organization, etc.
That’s where the rehab consultant comes in. Part of our job is to attempt to mitigate as much of these pitfalls as we can. If you are considering a HUD 203K or HomePath or HomeStyle loan, give us a call to see how we can help you make that process smoother and less painless. We’ve done over 600 of these in the past four years. That makes us one of the premier consultant providers in Central Florida.
Andy Shirley, HUD Consultant Chum #A0769.