Comments on: A Word of Caution about HUD 203(k) Mortgages

By: Shay

Shay — Mon, 14 Mar 2011 15:31:07 +0000

I’m in the process of making an offer on a 203k approved condo and am worried about the process. Right now, I’m working with BoA but will definitely call a local credit union ASAP to see if they can assist me. Of course, I’d like things to run smoothly and be able to close and move in my place by the end of June, at the latest. Does anyone live in Michigan or suggest good, experienced people who can help me in the process?

By: David95

David95 — Sun, 16 Jan 2011 05:27:37 +0000

Not the most stimulating headline, I admit, but it

By: gl

gl — Thu, 30 Dec 2010 01:13:11 +0000

oh I forgot to tell you the best part: the listing agent told us we “need” to get the loan from Wells Fargo. i told her top drop dead too because I have my own lender who is using whatever banks he wants but my point is finally-made: don’t accept anything because the government says is for your own good or the realtor has a man for the job already! Assemble your own team before you make your move and move as one, lawyer/realtor/lender/buyer and remember :your goal is to have the lowest-posible loan NOW not improvements which will “increase bla bla bla” the value when jesus come. If the house is approved by the local town for occuppancy…tell them what i tell them: drop dead with your 203k loan! I’f i’m wrong please advise-I’m checking this page every day. (don’t advise me on english, i’m still mad by their audicity to tell me what to do and with who and whem i’m mad my grammar and spelling suffer which brings me again to the all bank executives should suffer and suffer and suffer and hahahahahha

By: gl

gl — Thu, 30 Dec 2010 01:06:32 +0000

I could not believe what a joke this home-buying thing has become! I made an full-price, 20% down offer on a property and after oen month finally we got an answer (remeber, we gave them what they wanted-full price!). The bank (seller) wants us to get a 203k loan to fix the property which is in perfect shape except the basement which is not finished anyway so no one expected to live there. I’m told they will not sign the contract until i agree to get this stupid loan I don’t need! Sure, the kitchen cabinets will need replacing sooner or later but shouldn’t it be my decision? If electric, heat and water is working why do i HAVE to take this loan, ha? what’s next, force me to pain one bedroom in red? Call me irrational but it all started with the seat-belt laws: you accept to be forced into government-approved “safe” behavior and they’ll do you worse than in Soviet Union. i believe these loans exist to increase the expense on the buyer…come on, banks must be furious with these prices…they have to come up with something to make the loan fatter…People, pay off your loans, cut the credit cards, let them all go out of business. As for me, I’m waiting for the inspector to tell me how many billions i need to borrow from the bank in 203k hahahahha. Drop dead Republicans and Democrats, you destroyed this economy and you can’t wait to find new ways to mess it up so bad we’ll elect you kings. DROP DEAD and i hope all your bank executives have heart attacks while counting the money from the interest on the unacessery loan!

By: Z

Sun, 19 Dec 2010 21:40:52 +0000

Dealing with a 203K now. My advice is to have a very experienced consultant and choose a class A contractor who has done lots of 203K repairs. I hear horror stories about contractors not getting paid quickly by the bank and then slowing work because they don’t have capital to finish the job. Make sure your contractor is well capitalized. (has the cash to finish without payment from the bank)

This is my first experience with the 203k program. Getting $60k in work done in about one month. Two weeks in and two weeks to completion at the moment. Contractor started about two weeks after closing. Still don’t have paperwork from BoA, but the FHA consultant called a contact and got the account number so the contractor could apply for his draw. Experienced people make a difference in your 203k experience.

By: CNJ

CNJ — Mon, 27 Sep 2010 18:44:31 +0000

I just bought a housing using a 203k. It was not a headache for me. Everything went smoothly. I would say the bank did not do a great job of educating us on the ins and outs of the process. I was fortunate enough to find a great general contractor who educated us about the process, setting realistic expectations and providing us with quality work.

By: W. Moore

W. Moore — Sun, 29 Aug 2010 23:33:35 +0000

I have built and remodeled homes for more than 30 years, a lot of which were HUD financed. I am also a certified HUD 203 k consultant. I do not do business with B of A for exactly the reasons cited. Use a local or regional bank of Mortgage Broker. And leave the tarp banks to themselves.

By: k musial

k musial — Tue, 02 Mar 2010 15:28:21 +0000

Thanks for this article. Though it barely even gets to the levels of agony that results from using a 203k mortgage. I wish there was more attention paid to this.

By: Rene Martinez

Rene Martinez — Sun, 28 Feb 2010 01:23:15 +0000

Heed this article. I’m in the process of trying to buy a wonderful home using a 203k from wells Fargo. The problem is wells Fargo has screwed up the paperwork many many times. Now the sellers have threatened to kill the contract. Likely the whole thing will result in about 4 months and $7k wasted on my end. 203ks are a joke. If you insist on getting one, DON’T use wells Fargo. Chose a smaller and more agile company. The gov’t isn’t on the side of the people either. They haven’t done anything appreciable to make banks keep their end of contracts.

By: tcurranmortgage

tcurranmortgage — Tue, 26 Jan 2010 02:30:40 +0000

Love this article, thanks for posting!

I’ve originated and closed sec. 203k loans going back as far as 1992. Back in those days President Clinton created an initiative for Mortgage Bankers to use the program to rehabilitate inner-city housing. In search of profit and a somewhat idealistic bent, I jumped in feet first and originated 203k’s in Harlem and Bedford-Stuyvesant here in New York.

We were doing purchases of about $50,000 with $200,000 of repairs, converting SRO housing (Single Room Occupancy) and burned out and gutted Brownstones into decent and affordable 1, 2, 3 and 4 family homes. I became an expert by dint of the process: learn what you need to close the loan or die!

That problem you point out about the escrow “draw-outs” is typical of this program and the reason why you want to work with a regional/local Mortgage Banker, NOT one of those losers who took tons of bailout money just to improve the number of prompts on their voicemail systems before you get a living, breathing human on the line. As a mortgage broker today I would NEVER place one of my 203k loans with any of the large banks. No, not EVER.

BTW, this program is NOT just for “fixer-uppers.” Oh, no, not at all! If you want a new kitchen for $15,000, there you go: 203k. If you want to make the property energy efficient, and finish the basement for a family room, well, there you go, again: 203k.

I’ve long told Realtors they can sell more homes using this amazing financing product when the Buyers object to the kitschy 1965-era panelling and the tiny kitchen and the oh-so-1953 bathrooms. A 203k loan with $25,000 of improvements goes a long way to helping a homebuyer become a homeowner of a home they’ll love.

Secret Family Recipe: Your Contractor must understand there is NO upfront money. The program protects the contractor money but doesn’t pay out until the work is under way.