203k Program Changes

[Garrett 1605]

I've been a 203k Consultant since 1993 in both Chicago and now here in Atlanta. I have been involved with over 3200 203k over the years. My average monthly income has been somewhere in the $ 8,000 to $10,000 a month range for a long time now. I typically do on average about 3 to four new 203k files a week and 8 to 10 draws. I charge exactly what the guidelines allow but, I sometimes add a $250.00 feasibility inspection fee. It the construction is over $100,000, my fee is based on 1% of the construction. My min. draw fee is $200.00 plus I do charge for mileage and change orders.

I was at a meeting at HUD in Washington back in November. One of the issues raised were the Consultants fees. HUD has agreed to look at it and make some changes later this spring. They are considering some sever program changes regarding how we and the lenders do business. We expect some major 203K changes to happen in May of this year.

Other topics being reviewed is allowing Investors back into the 203k and eliminating the Streamline version of the 203k. Streamlines make up between 70% to 80% of the 203k's being done. If they eliminate the Streamline, we as consultants will be in huge demand once again and there will be a need to train additional consultants on a nationwide basis.

Please feel free to contact me should you have any questions or comments.

[Mark P]

A mortgage friend told me "if the improvements are under $35,000 and no structural changes are being made, a consultant is not needed." Is this true?

Also if so, what does HUD consider a "structural change? Is rennovationg the kitchen and "structural change"?

What size loans do you see on average?

[randynavarro]

A mortgage friend told me "if the improvements are under $35,000 and no structural changes are being made, a consultant is not needed." Is this true?

That would be the Streamline 203k loan. True, a Consultant is not required. The Streamline is a problem for many lenders and it is on the chopping block. Folks are getting their granite countes and stainless appliances but there's still significant problems in the house that need correction. There are lots of loopholes.

Also if so, what does HUD consider a "structural change? Is rennovationg the kitchen and "structural change"?

Usually moving a wall, changing the footprint, or something that requires an architect or construction permit.

What size loans do you see on average?

In my neighborhood, the average K runs from $40k to $80k in construction work. A few loans are significant, upwards of $180k and $200k.