Solomon Edis…, Home Buyer in Oklahoma City, OK

Where to find a lender who will allow me to self perform the work on a 203k loan?

Asked by Solomon Edison, Oklahoma City, OK Fri Jan 18, 2013

I am a project manager for a commercial construction company so, I would like to self perform most of the work for my remodel. Are there any lenders in the Oklahoma City area that will allow me to do that with a 203k streamline loan?

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Wilhelm Koenig’s answer

On a 203K loan, you must have licensed, bonded contractors do the work, since the loan approval on a 203K also includes approving the contractors. I hope this helps.

Take care,

Wilhelm Koenig
0 votes Thank Flag Link Tue Apr 2, 2013
With all due respect to everyone who answered (and even the ones who'll delete their post after this response), it's great that we're trying to help each other out and borrowers looking to buy but it serves the readers of our forum poorly to give inaccurate answers and then others chime in and agree with wrong answers...

Lets get a couple of things out of the way here, what you can and can't do with a 203k and then what a lender will or won't allow you to do...

I'll use the terms "HUD and FHA" interchangeable since most of you reading this will expect to see "FHA" when "HUD" is the body actually setting the guidelines, "FHA" is the type of insurance that covers these loans.

* HUD/FHA WILL allow you to do "Self-Help"
* HUD/FHA does NOT have any requirements on the contractors that do the work (licenses)
* HUD/FHA does NOT have a list of approved contractors
* The law doesn't play any part in the selection of contractors or determination of who can do what, these are investor base guidelines that are determined by the Department of Housing and Urban Development (HUD).

Ok, lets get a bit more granular here.

* A LENDER will ***NOT*** allow you to do "Self-Help" as a rule of thumb - Statistically, foreclosures on rehab loans where the borrower did their own work is SIGNIFICANTLY higher. (It is possible with some lenders to get exceptions to do some minor work but this is the exception, not the rule and usually requires you have the expertise and additional reserves to even get them to consider approving it)
* A LENDER is responsible for "checking out" the contractor. What "checking out" means is subjective, each lender will have a different spin on that. Where I work now, a GC doesn't need to have a license unless one of the jurisdictions the home is in requires he have one but other lenders will require it regardless of what local customs are. Some lenders will do deep background checks on contractors, others will do something more limited.
* Some lenders have a list of approved contractors they'll allow their sales people to provide but everyone keepsa list internally of contractors's they've approved so they don't have to do a full background check everytime a loan with that contractor comes through the door.

There's a lot more I could add but in the interest of time and trying to not put our readers to sleep, I'll leave it here for now.

HUD's primer on a 203(k)…
Web Reference:
1 vote Thank Flag Link Fri Jan 18, 2013
Mr. Edison,

You can ask your lender if the LLC or Company that you own performs the work, if that will be acceptable.

An LLC only costs around 300 to 500 dollars to open and if you need to speak to the CPA that helps me with my companies, just let me know.

Josh Barnett, Realtor
Metro First Realty
Web Reference:
0 votes Thank Flag Link Fri Jan 18, 2013
As a certified 203K Rehab Realtor, I can agree with the others, you CAN NOT self do this. It is not a lender issue but the legal basis for the loan itself. Now with that said, the contractor might be able to hire you as an employee like others doing the work, IF he is willing to risk the liability for this, doubtful unless this is your line of work. As a project manager-do you do actual hands on work everyday or do you delegate more? If you find a lender who will let you do this, they are violating the regulations for this program. I doubt that anyone would risk their business and do this. 203Ks are similar in nature to how as to how a construction loan is worked. As work is completed, money is drawn and the contractor(s) are paid. All of the money is not paid up front. It is held. Say it needs a roof, floors, siding, plumbing, etc. Roof is completed-contractor shows it is done-gets paid. Floors completed-paid. Siding completed-paid. Plumbing completed-paid. Lender can require new inspections to verify work has actually been completed.

Karen Moseley, Realtor
Coldwell Banker Select,
0 votes Thank Flag Link Fri Jan 18, 2013
Hi Solomon,

I work with several lenders and they say no. You must contract the work to licensed contractors.
I wish I had better news for you.

Best of luck,

Bridgett Wells
Keller Williams Realty
0 votes Thank Flag Link Fri Jan 18, 2013
Unfortunately, you cannot perform your own work on a 203k loan. The loan requires that you use 203k certified contractors.

If I can help you find a house to purchase, please contact me at 405-808-7922.

Carolyn Sims
Keller Williams Elite
Web Reference:
0 votes Thank Flag Link Fri Jan 18, 2013
Here are a couple lender's I recommend. They are both really nice and welcome questions, so I'd give them a call and see what they can tell you. If they don't allow it, they might know someone who would.

David Carson, WestStar Pacific Mortgage - 715-3100

Matt Brown, 1st State Bank - 778-6500

Let me know if I can be of any assistance.
0 votes Thank Flag Link Fri Jan 18, 2013
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