John Murphy,  in Chicago, IL

Is the 203(k) fha guaranteed Rehab/Purchase loan still available?

Asked by John Murphy, Chicago, IL Wed Aug 20, 2008

I would like to buy a property,rehab it and live in it but i think the 203 k loan is better and less hassle than having to get a construction loan and seperate purchase mortgage from the bank.

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4
James Wheeler, , Tampa, FL
Thu Aug 28, 2008
FHA 203(k) rehab loans have never been widely available - never assume that just because the government offers a certain type of program, lenders actually participate. But yes, 203(k) loans are still available. My company originates these loans in most states across the country, including Illinois. Please feel free to contact me at jwheeler@apexlending.com if you'd like to discuss your scenario.
1 vote
Rob Weber, Mortgage Broker Or Lender, Plainfield, IL
Tue Apr 6, 2010
John,

It's now eighteen months after your inital post and yes, 203k loans are still available. As you found back then and especially since then, a lot of lenders have stepped out of the rehab loan arena since then (203k/conventional version/portfolio rehab lending). There are a lot of new inexperienced players who are unfortunately giving the program a bad name (I get quite a bit of fallout calls and often it's too late to save the deal). I've talked to many contractors who are now feeling the pain who now refuse to work with anyone seeking financing from any company who's draw disbursements will be handled by a certain major bank (not my company obviously), both on the retail and wholesale side. Many lenders refuse to get into the arena because they won't spend the capital to ensure their default rate remains low (there's tremendous opportunity for fraud as a few banks no longer in business found out) and others who just won't add overhead to the bottom line in a recession.

That being said, these loans are still getting done and there are some experienced loan officers and some lenders who have all the right people in place to make these transactions pleasant or at the very least, not a painful experience.

I hope you've fared well and feel free to reach out if you have any questions.
Web Reference:  http://robweber.com
0 votes
Michele, Home Buyer, Chicago, IL
Thu Aug 28, 2008
On Tuesday of this week, I called 3 of the banks listed on the HUD site as 203k lenders. All 3 of the banks I contacted were in Chicago. Two banks told me they no longer do 203k loans. I left a message at the other bank detailing what I was looking for...no one even returned my call.

I remember one bank was Countywide. The other was National City Bank. First Capital Mortgage was the one that never called me back. So I assume they aren't doing 203k loan either.

Your best bet is to contact the Neighborhood Housing Service (you'll find them on the internet to find a location near you). The still do purchase/rehab loans.
0 votes
Scott Godzyk, Agent, Manchester, NH
Wed Aug 20, 2008
It is still available but will be changing, your best bet is to contact a trusted mortgage broker in your area, stay away from internet brokers. you can also go to http://www.hud.gov to look up sedetails on FHA loans. Good luck
Web Reference:  http://www.ScottSellsNH.com
0 votes
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