No Chance for Investors and the FHA 203k
HUD Secretary Shaun Donovan says "NO" to investors and the FHA 203k. He will not lift the moratorium on using this program for anyone other than owner-occupiers. This moratorium on investor financing came into play in October, 1996. HUD placed the hold on 203k loans to private investors after an audit found abuses and risks to the insurance fund. Now 15 years later the government doesn't want to revisit the issue and put oversights into place to help keep fraud down. Instead, the feds will avoid the issue altogether.
This is not the right move. The potential to kickstart the U.S. economy though the housing market is a well known opinion from many experts. The FHA 203k is one way (not the only way) to help get this recovery started. The 203k also takes aim at vacant homes and blighted neighborhoods, in hopes of turning them around into thriving communities once again.
Joe Daly is a nationally known renovation lending expert (and Renovation Program Manager at AmeriFirst). Daly says this about the decision:
"Most of us in the renovation lending business believe that there is an abundance of housing stock in America that is either in need of too many repairs or will always remain as rental properties. These properties (if the legislation would be passed) could be bought up by investors and rehabbed. Either for owner-occupied purchases after the renovations are complete or a rehabilitated rental market. Both improve neighborhoods and the standard of living."
Gary Smith is a home inspector and FHA 203k consultant in Mississippi. He says this about the 203k and investors:
"I think we should create a concerted effort to expand the opportunities for neighborhood revitalization the 203k offers. Investor participation would jump start that effort. Investor money means more workers are hired, economy is improved."
So what is an investor to do? Another option for real estate investors is HomePath Renovation. This program focuses solely on Fannie Mae-owned properties. While the FHA 203k is more broad, HomePath Renovation is at least a place to start. Whether you're an investor or a "regular" home buyer, home improvement loans can help with today's market of foreclosed and vacant homes in need of some work. Learn more with "The Ultimate Guide to Home Improvement Loan" at the button below.