A Visit to Washington D.C. -- Renovating the FHA 203k

A Visit to Washington D.C. -- Renovating the FHA 203k

Having delivered a live seminar on November 12th in Beltway, MD, Teresa and I enjoyed a beautiful Fall weekend in Washington D.C. This is a very pretty place to be when the leaves are changing colors, especially when it was as warm and sunny as we experienced. On Monday I was honored to participate in a roundtable discussion at HUD/FHA headquarters focused on improving the 203k program. In effect, we were gathered to discuss renovating the renovation loan itself!

It was a pleasure to spend time with some of the industry leaders in the renovation lending business. I also enjoyed spending some time fact-to-face with Lisa Ellis, Trish McBarren and some of the other great folks at the FHA who work so hard to support these important programs.
The discussions were lively, to say the least, as various topics were discussed from challenges, barriers, and improvements to issues such as mitigating risk, controls and enforcement. Opinions ran from one extreme to another on some topics, but all in all, some great ideas and real world experiences were shared. Some highlights of the meeting include:
·        An opening presentation shared housing trends and statistics that clearly demonstrate the vital importance of the 203k as a solution for today's market challenges and into the future. Almost half of all foreclosed properties require some significant amount of repair; and as millions of these properties move into the market for years to come, the 203k will continue to grow in importance. As a result, the FHA is committed to supporting and improving this program as necessary to allow it to make the greatest contribution.
·        In spite of ideas for improvement, it was clear to a number of us that this program is not broken or failing in any significant way. It's a well designed solution that delivers great benefits to homeowners and homebuyers coast to coast. As incremental improvements are made over time, this program will only get better.
·        The FHA is considering rebranding the types of 203k offerings. The 203k program name will remain, but the Standard and Streamline may be renamed to be more intuitively understood by consumers.
·        A great deal of excitement was generated over discussions about the introduction of a new 203k investor product that could open up opportunities for smaller investors to purchase and improve properties, generating profits in the process. As you may know, the use of the 203k by investors was discontinued in 1996 following numerous abuses of the program. The new investor program is being designed to protect against these abuses, minimize risk to the FHA and its lenders, yet provide a valuable financing solution to drive benefits to communities across America. More details to follow.
On my trip back home to the coast of Southern California, it occurred to me that I was flying over millions of homes that could benefit from the power of this amazing loan program and that I am blessed to have the opportunity to help shape it's future on a number of levels. I'm also thankful to work with such great people at the FHA and REbuildUSA, as well as all of our members throughout the industry who are dedicated to making our homes and communities safer, healthier and more beautiful places to live.

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