WE OFFER
IDEAS THAT RAISE YOUR BUSINESS ABOVE
THE EXPECTED

Loan365.pro

I think the 203K streamline loan is another bank scam (foreclosure, credit)


08-05-2009, 12:50 PM
 

286 posts, read 1,084,018 times

Reputation: 147

I just closed a 203k loan with Bank of America on Monday. It was a total nightmare to get through the paperwork, and there were plenty of lies and mis-leadings from the bank. Don't get me started. However, my wife and I are completely happy with the program. It's not a 'help the poor get a home' scam or anything like that. We educated ourselves quite a bit from the FHA website and from asking lots of questions. Knowledge is power and that's what you need.

Keep up the fight and keep strong. We're moved in and and now beginning our remodeling next week. Wish us luck!

Reply With Quote Quick reply to this message 08-06-2009, 06:51 AM
 

Location: Twin Cities, MN

10 posts, read 116,808 times

Reputation: 14

The documentation requirements, as outlined on the HUD sites and their mortgagee letters are only a starting point. The FHA lenders may add supplemental standards onto the base, and they do often for FHA 203K. That is because quite a few 203K loans end up in litigation or in a quagmire where the work does not get completed during the allowed 6 months. Lots of first time buyers, mix in their first experience with a couple contractors and misunderstandings arise. The industry has lost two investors recently that specialized in FHA 203K. Taylor, Bean & Whitaker was the most recent to depart. They didn't meet HUD audit requirements per articles I have read. The other company? Not sure what went wrong. Both restricted completion period to 3 months, not 6 months as a safety cushion. Their underwriting had a reputation as being fairly picky. I can't imagine how the big banks, with their cumbersome back end operations, can survive the 203K process without constant customer service issues. Another matter: The HUD consultant makes some good points. I would like to add that many home inspectors are from the building trades and have knowledge of local code requirements. If the bid details of the proposed improvements are given to them to consider as part of their scope of work, I am sure many of them could do a good job of pointing out potential issues. Also, make sure the contractors bid addresses code issues. Run the proposed improvements past your local planning/building department and they will help you as well. As many alert eyes on this as possible is helpful.

The FHA appraiser will be concerned about HUD minimum property standards, but I will confirm that they typically will not bring up code issues that may be triggered as permits for the improvements are pulled and follow up inspections made by the local building authority.

Reply With Quote Quick reply to this message 08-06-2009, 10:33 PM
 

1 posts, read 13,143 times

Reputation: 14

I work in the 203 K Department. I would never in a million years get a 203 k loan. The Department is a Joke and it is total chaos. Stay Clear of this loan.

Reply With Quote Quick reply to this message 08-13-2009, 11:46 AM
 

1 posts, read 13,007 times

Reputation: 11

Im going through the FHA 203k loan process as well. So far it has been really good and smooth I hope it keeps being the same way. I think it has been smooth because my lender had some contractors he had work with in the past, and I picked one of them who was able to give me a really good deal on the repairs. So lender had all the contractors info, and they knew each other already from other 203k loan rehab. Other than that Im just waiting on the final approval from the underwritter, im really anxious! The closing is in 2 weeks which is 45 days, Lender says everything looks good. By the way Im in GA if you want the info let me know.........ale_varg@yahoo.com

Reply With Quote Quick reply to this message 08-13-2009, 12:17 PM
 

286 posts, read 1,084,018 times

Reputation: 147

Quote:

Originally Posted by aleja13

Im going through the FHA 203k loan process as well. So far it has been really good and smooth I hope it keeps being the same way. I think it has been smooth because my lender had some contractors he had work with in the past, and I picked one of them who was able to give me a really good deal on the repairs. So lender had all the contractors info, and they knew each other already from other 203k loan rehab. Other than that Im just waiting on the final approval from the underwritter, im really anxious! The closing is in 2 weeks which is 45 days, Lender says everything looks good. By the way Im in GA if you want the info let me know.........ale_varg@yahoo.com

Good luck! I've been told we were looking good on all of our paperwork for many many weeks and it took us 90 days to close (about 45 days longer than we were promised - June 22 to Aug 4). Our loan was 'in underwriting' since May 28... Reply With Quote Quick reply to this message 09-28-2009, 05:18 PM
 

1 posts, read 12,621 times

Reputation: 10

We have a 203 k that was purchased by bank of america but now we cannot get ahold of anyone in their 203 k offices...we now have contractors who are about to quit because we do not know when or how to get our first draw. Any advice?

Reply With Quote Quick reply to this message 09-28-2009, 10:29 PM
 

286 posts, read 1,084,018 times

Reputation: 147

Sarahlmac - if you have a HUD Inspector, they should prepare a draw request for you and submit it to bofa. In turn, your contractor needs to submit a copy of applicable building permits and a lien waiver. Once those are submitted (via email, for my project), the bank will cut a check within 48 hours and mail it to you overnight. That was my process...

Do you have ANY contacts? If nothing else, you should always be able to contact your original loan officer and they can give you a contact name, number and or email. I've gotten our first draw request check, BUT have not heard any correspondance back from the 203k department - who never seem to answer thier phones or email!

Reply With Quote Quick reply to this message 10-20-2009, 09:42 AM
 

7 posts, read 32,784 times

Reputation: 13

My loan closed on 9/23. It is a streamline 203K. It is my understanding that there aren't any forms required for the initial 50% disbursement. However we are now in week 4 waiting. Our contractors are waiting, we can't move into the home yet and are paying twice the bills. Worse, BofA expects our mortgage payment 11/1 which includes the total principal amount, inclusive of the rehab funds we have not been advanced. I can understand the issues around how long it takes to close, given the hoops everyone has to jump through, but after closing why am I waiting a month for the initial check? And then having the gall to ask me to make a payment on the full price when they refuse to advance me the funds?? I'm not sure the legality of that but it certainly isn't ethical.

Does anyone have any advice on what to do? I can't get a hold of a single live person in the BofA 203k department, even after enlisting the help of a family member who works for BofA. My originator is apparently being stonewalled by BofA as well.

Reply With Quote Quick reply to this message 10-20-2009, 10:03 AM
 

1,138 posts, read 2,136,175 times

Reputation: 848

Sorry to hear that Dingo. I'm in (or was) in the same situation as you. I closed in mid-July (btw, it took almost 90 days to close using a streamline 203k loan). I was told that at the closing table I would be given the 50% disbursement. The closing attorney didn't know what I was talking about when we met at the closing table. The very next day, the attorney tells me that he forgot to give me some form stating that I can't get the first disbursement for 4 weeks. Now, considering that I was told I could start work on Day 2 and now being told to wait a month, I was pissed (as I'm sure Dingo is).

I had the same deal, my mortgage broker told me that BofA was going to be the loan servicer. He gave me the loan number and BofA's phone number. Of course it was the "generic" BofA main number. I was bounced around over and over between different departments that didn't even know what a 203k loan was. Finally I found someone that knew what I was talking about... and they said that my name isn't even in their system yet. Which (according to them) means that my loan isn't even in their queue yet. It takes about 30 days to get through the queue and then another 3 weeks for the disbursement to become available.

Long story short (too late), my loan originator was not able to sell my loan with the 203k streamline "thing" on it. BofA would not take it until that was settled. So, the loan originator cut me the check for the 50%. I'm still waiting on the other 50%. I put in the paperwork for the 2nd disbursement the other day. I think the originator is on my side since they want to get the loan off their books ASAP. And yes, I had to pay the entire monthly payment on the mortgage even though they were holding 35k+ of the principal.

A few notes to readers of this that are thinking of 203k streamline loans. In this writer's opinion, what FHA says the loan is is not what you are really getting. Here are some examples from my own experience with this:

- FHA says that the homeowner can do some work on a self-help basis, however the "investor" disallows me from doing this. The investor won't even let me buy a gallon of paint under the 203k streamline loan. All work has to be done by a licensed contractor*... even painting. - FHA says that you only need to provide general plans for the work (text saying "I'm buying a new fridge/dishwasher/oven that will cost X Y and Z dollars. I'm putting on a new roof that will cost W dollars, etc.") No, the investor can overrule all of that and demand whatever they want. Ultimately, I had to provide schematics of the kitchen, exact model numbers for all appliances, some sort of cost-benefit analysis for windows that I was installing (mind you, that cost $500). Oh, and these were all things that were asked for about 72 hours before closing, and the investor would drop the loan entirely if I could not provide them. - FHA claims that these loans should close in 30-45 days. In my case it took 90. Now, I know there is a backlog of loans going on... but 90? I guess you just need to be aware that what a mortgage broker might sell to you as an FHA Streamline 203k loan is not necessarily what you are going to be buying. Sure, it might have the FHA "sticker" on it, but the investor can change those rules around however they see fit.

*In my case, I worked out a deal with my contractor where he "hired me" as an unpaid subcontractor, so I could do the work and still use this loan.

Reply With Quote Quick reply to this message 10-27-2009, 02:53 PM
 

2 posts, read 16,849 times

Reputation: 12

Default I hate the 203K Loan

I contracted the house I am trying to buy in March of this year. It is 10.27 and I STILL don't have a closing date. I was first caught up in Taylor, Bean and Whitaker. 2 days from closing, I was informed they were shutting their doors. Now with a new company, and the loan process and underwriting have been one of the worst experiences of my life. The seller of the home is at their end. They refuse to extend the contract after 10.30. Which means I will most likely loose my deposit and all money I paid for inspections. And getting someone to respond to you is futile. They don't care what your going through or that your going to loose it. But do I have any recourse?? At least to try and get my money back. Does anyone know if a real estate attorney can help?

Reply With Quote Quick reply to this message Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


Page 2

10-27-2009, 07:36 PM
 

Location: Plano, Texas

1,676 posts, read 5,818,440 times

Reputation: 676

Quote:

Originally Posted by disgruntled203k

I contracted the house I am trying to buy in March of this year. It is 10.27 and I STILL don't have a closing date. I was first caught up in Taylor, Bean and Whitaker. 2 days from closing, I was informed they were shutting their doors. Now with a new company, and the loan process and underwriting have been one of the worst experiences of my life. The seller of the home is at their end. They refuse to extend the contract after 10.30. Which means I will most likely loose my deposit and all money I paid for inspections. And getting someone to respond to you is futile. They don't care what your going through or that your going to loose it. But do I have any recourse?? At least to try and get my money back. Does anyone know if a real estate attorney can help?

What a horrible experience. Your best bet would be a attorney but not sure if it would help but maybe worth a call. Since lenders do not commit to a date, they can probably go as slow as they want. But sure seems like bad customer service. Reply With Quote Quick reply to this message 10-28-2009, 09:46 AM
 

286 posts, read 1,084,919 times

Reputation: 147

Quote:

Originally Posted by disgruntled203k

I contracted the house I am trying to buy in March of this year. It is 10.27 and I STILL don't have a closing date. I was first caught up in Taylor, Bean and Whitaker. 2 days from closing, I was informed they were shutting their doors. Now with a new company, and the loan process and underwriting have been one of the worst experiences of my life. The seller of the home is at their end. They refuse to extend the contract after 10.30. Which means I will most likely loose my deposit and all money I paid for inspections. And getting someone to respond to you is futile. They don't care what your going through or that your going to loose it. But do I have any recourse?? At least to try and get my money back. Does anyone know if a real estate attorney can help?

OMG - worst experience I've heard of yet... Wish I had a bit of advice, but I have no idea at this point. I hope you get your deposit back, but I don't think you'll get money back for the inspections etc... Best of luck, disgruntled. Reply With Quote Quick reply to this message 11-02-2009, 04:26 PM
 

2 posts, read 16,857 times

Reputation: 12

At this point, two days before scheduled closing they came back and said they have decided to not lend any money at closing to start repairs????? How is that legal, after they have repeatedly told me they would. I do not have the money to start the work and front 15,000 to the contractors. If I did, I wouldn't need this loan. Well, it has passed the final extension, even though they are desperatley trying for another. I am now in the process of trying to get my good faith deposit back. They are trying everything they can to stop it. I have never been so disappointed in people... I can't believe what should be a pleasant experience has been so absolutley horrible. If I can ever give anybody a good piece of advice, it's to STAY AWAY from the 203K.

Reply With Quote Quick reply to this message 11-05-2009, 01:53 PM
 

2 posts, read 9,713 times

Reputation: 10

Sarahlmac,
Did you ever get your disbursement? We have been waiting about 5 weeks for our final disbursement from Bank of America. No one ever answers the phone there because they are always "experiencing heavy call volume" Our original loan was with Towne Mortgage, who washed our hands of us when they sold the loan to B of A. I am now sending a fax to them every single day, begging for a reply, and have yet to hear from anyone. The contractor is ready to put a lien on our house. What a farce! I would advise anyone to avoid the 203K.

Reply With Quote Quick reply to this message 11-05-2009, 01:57 PM
 

2 posts, read 9,713 times

Reputation: 10

Quote:

Originally Posted by Eusibius2 Sarahlmac - if you have a HUD Inspector, they should prepare a draw request for you and submit it to bofa. In turn, your contractor needs to submit a copy of applicable building permits and a lien waiver. Once those are submitted (via email, for my project), the bank will cut a check within 48 hours and mail it to you overnight. That was my process...

Do you have ANY contacts? If nothing else, you should always be able to contact your original loan officer and they can give you a contact name, number and or email. I've gotten our first draw request check, BUT have not heard any correspondance back from the 203k department - who never seem to answer thier phones or email!

Eusibius2,
How do you get a 203k inspector? We don't have anyone, and we cannot reach anyone at Bank of America and have been waiting weeks for our final disbursement. Our final inspection was performed by the original appraisal company. Thanks for any help or input you have. Reply With Quote Quick reply to this message 11-05-2009, 02:13 PM
 

286 posts, read 1,084,919 times

Reputation: 147

Jen - you can always check the HUD website who has a list of registered HUD 203k Inspectors: HUD FHA Inspectors & 203(k) Consultants We got ours through our lender, since they worked frequently together. Initially, it also worked out well because the HUD Inspector also worked frequently with the 203k Loan Processor. Well, things have changed, our loan officer and loan processor neither work at BofA. BUT - we still have a good relationship with the Inspector who really knows what he is doing. He is also listed on the HUD website. When checking, you will probably get a few names on the list that are in your area. Just like any other contractor - call several and check them out like you would anything else (mechanic, home inspector, contractor, etc...). Most important thing for us was to know how many 203k loans he's done in the past and how knowledgeable about them he is. These are really tricky loans, from beginning to end (and then some). Getting people who deal with them on a regular basis is key to success. Learning on the spot is not an option (except for those of us who are doing the loan on our own house for the first time! LOL).

Good luck!

Reply With Quote Quick reply to this message 11-06-2009, 12:40 PM
 

2 posts, read 9,675 times

Reputation: 10

I too am going through the same things as many of you. I was fortunate to have a smooth closing process. (delayed 1 week) And I foolishly thought that was setting the tone for everything to go smooth, but boy was I wrong. I thought that once we made it thru closing, everything else would be sweet and easy. I am now having the worst time of my life with BOA!!! (I actually bank with BOA and come the anniversary date of my CD, you better believe that I am taking every single penny I have to another bank!) I think that it is just horrible what they are putting people through. Most of us have worked hard and saved money to be able to buy a home and probably have used most if not all of our savings to do so. Only to discover that you can not occupy the home you just purchased and its because �people� are not doing their jobs!!! Its atrocious. I have called BOA about 100 times a day. I have called the customer service department, the home loans department, every department that I could think of and they all say that the 203K department is out of their reach�I find that so hard to believe. I have now contacted my Congressman, FHA and HUD. Someone is going to do something because at this rate my fianc� and I will be in foreclosure before we even move in being forced to pay a mortgage and rent� This is absolutely past ridiculous. We all need to come together as a United Front. I say we create a petition and have as many people we can find sign it and then send it to any and every single congressman/woman in our areas. Someone to do something about this because they are playing with peoples lives and it�s not right. If you are interested please contact me at [email]miss_n_dependent@hotmail.com[/email]

Reply With Quote Quick reply to this message 11-06-2009, 12:44 PM
 

286 posts, read 1,084,919 times

Reputation: 147

Feel free to draft that letter and post it online... Many people will be sure to sign it!

Why can't you move into your house? The day we closed, we moved right in. Is your house un-inhabitable and that's the reason for the 203k?

Reply With Quote Quick reply to this message 11-06-2009, 01:34 PM
 

2 posts, read 9,675 times

Reputation: 10

Yes, its inhabitable... I will surely get on the move with the drafted letter and post for input. We have no kitchen at all, no hot water and other things. I have a 2 year old and I would never let her move in that home as it stands now.

Reply With Quote Quick reply to this message 11-08-2009, 05:12 PM
 

1 posts, read 4,801 times

Reputation: 10

Glad to know that we're not alone. I've been trying to close on a 203k with M&T Bank since July without luck. And I went them specifically because I'd heard they we faster than BOA and Wells Fargo! We have spotless credit and could qualify for a significantly larger loan, so we do not understand the holdup. This has been terribly frustrating. I would be interested in hearing what others learn re: legal recourse. I'm going to be furious if I'm out $1,500 for inspections etc. just because the bank takes too long and my contract expires...

Reply With Quote Quick reply to this message Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


Page 3

11-09-2009, 09:18 PM
 

9 posts, read 74,389 times

Reputation: 73

Always ask your lender who services the loan, if it is BofA then find another lender. Ask you loan officer how many 203K loans they have closed and ask them if they offer both the full 203K and the streamline. Experience is vital on the 203k. Do your research before you apply.

Reply With Quote Quick reply to this message 11-10-2009, 01:08 PM
 

286 posts, read 1,083,618 times

Reputation: 147

Quote:

Originally Posted by JonathanBlackwell

. . . Ask you loan officer how many 203K loans they have closed and ask them if they offer both the full 203K and the streamline. Experience is vital on the 203k. Do your research before you apply.

I can't agree more with JB... Learning by trial-by-fire will not work. an experienced LO is the only way you are going to have a successful loan. Reply With Quote Quick reply to this message 11-10-2009, 05:46 PM
 

8 posts, read 35,512 times

Reputation: 19

Me Too

Quote:

Originally Posted by beltway_insider

Glad to know that we're not alone. I've been trying to close on a 203k with M&T Bank since July without luck. And I went them specifically because I'd heard they we faster than BOA and Wells Fargo! We have spotless credit and could qualify for a significantly larger loan, so we do not understand the holdup. This has been terribly frustrating. I would be interested in hearing what others learn re: legal recourse. I'm going to be furious if I'm out $1,500 for inspections etc. just because the bank takes too long and my contract expires...

I've been trying to close on a 203k streamline since July myself. I'm trying to buy a HUD house. I've emailed and called with no luck. Each extension is $375 + $25 wire transfer fee. I've had 4 or 5 now.

It just seems outrageous that there is no recourse to the consumer on these kinds of activities. I thought I was going to closing in the first week in Oct only to find out the loan was just getting to underwriting.

Reply With Quote Quick reply</p>
<div align=

to this message"> 01-13-2010, 10:12 AM

 

1 posts, read 6,266 times

Reputation: 10

I am an approved 203k contractor that is getting screwed by Bank of America, which also happens to be the bank i do all my corporate banking with. I am owed 10's of thousands of dollars for work completed on the homes and the processing center is no longer taking phone calls. In the meantime, I owe my creditors money, i cant pay my families personal bills, and I don't know when it will be resolved. I basically worked about half a year for nothing. Thanks BOA!!

Reply With Quote Quick reply to this message 01-13-2010, 12:14 PM
 

286 posts, read 1,083,618 times

Reputation: 147

CTC - everyone with a 203k with BOA is in the same situation. Stay calm and don't take out the frustration on the homeowner - they've already paid the money to BOA. And most advisably - don't file a lien as it will only slow down the process even more. At that point, you'd be lucky if you get any money at that point and will only result in a much worse situation for everyone. Sit tight, they'll come through. We finished ours recently... was supposed to be a 3 week project and took nearly 4 months due to BOA delays. But, all the money came through. And yes, we used BOA/203k approved contractors and inspectors

Reply With Quote Quick reply to this message 02-01-2010, 02:15 PM
 

Location: Massatucky

1,105 posts, read 1,617,352 times

Reputation: 1554

Default 203K Consultant Weighs In Hi I am a 203K Consultant and the amount of misinformation here (original poster) is off the charts. Firstly, I work for the borrower and protect their interest. When I do an inspection, often the borrower has a contractor on board and a price in hand. I do a reality check for them: Has the contractor included everything? If not, then I insist they add it BEFORE the closing so we avoid costly change orders. I recently looked at a house in Dorchester, MA that was bid on without ANY electrical costs included in the price - unacceptable. These 1st time buyers went back to their GC and asked him to add the needed costs for re-wiring the new bath and kitchen which - HELLO - triggered an upgrade for all the fire protection systems and the main electrical panel. So an ignorant person may say "Well the 203K consultant came out and now my project is costing more" you should realize you actually got something for your fee: good advice and a better project with cost controls UP FRONT.

I am a construction PROFESSIONAL. I do not negotiate my fees either. I have rehabbed over 10,000 housing units in the MA housing market and I help people all the time who need to make good decisions about borrowing money under the 203K program.

Reply With Quote Quick reply to this message 06-28-2010, 02:50 PM
 

2 posts, read 10,727 times

Reputation: 11

Hoping for some help here. I want to buy a 350K house that needs roughly 200K of work to rehab. I have 53K in savings. I cannot afford 20% down on the purchase and 20% down on a construction loan. My friend mentioned the 203K loan. Looking around the FHA site it says the FHA loan max for my county is 410K for a single family home. Would it make sense to take the full 410 loan with 3.5% down to purchase and rehab 60K of the house? Then obtain a 140K construction loan to finish it off with 20% down. After it's all done, can I roll them all into 1 fixed 30 year loan? I'm confused. Am I missing something? Any help is greatly appreciated.

Reply With Quote Quick reply to this message 06-28-2010, 05:27 PM
 

Location: MID ATLANTIC

6,542 posts, read 14,462,753 times

Reputation: 6217

You would only be able to go with the 410K loan if the home would be habitable with just 60K of work (and within HUD Minimum Property Standards).

Construction perm financing is pretty lean in my area and most require 20% down with 720+ credit scores. Home equity lines are also a pretty tough way to go......again, the banks are looking for equity before they will loan.

Reply With Quote Quick reply to this message 06-29-2010, 09:08 AM
 

2 posts, read 10,727 times

Reputation: 11

Thanks. I should have clarified that the "200K worth of work" I was referring to above went well beyond making the house habitable. It was making it a completely finished gut-rehab (new everything). It's habitable right now, with electrical, plumbing, etc. all working. But my 200K figure would account for entirely new mechanicals.

Reply With Quote Quick reply to this message 10-18-2010, 10:32 AM
 

1 posts, read 4,832 times

Reputation: 10

My house is supposed to be done by the end of this month. I have ran out of funds, the roof stated to leak very badly after i closed on the house. once those repairs were made i was out an additional 2K. All of the duct work in the house had to be replace due to the roof leaking for years on the plenum. My loan took over 90 days to close and the broker I used sat on the monies an additionl 45 days before selling the loan to Bank of America. BofA took two weeks for my first draw putting me behind two months out of the six to complete the rehab. I am not going to be able to afford the carpet so i was going to paint the floors, does anyone know if this will pass a HUD inspection. Also, I bought different appliances than was listed on the inital bid is this too going to be a problem? Who do i need to call and how do obtain my final draw so i can pay off the contractors and complete the rehab. any help would be appreciated this has been a nightmare and i want it to bo over and done with...

Thanks..

Reply With Quote Quick reply to this message Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


Page 4

02-08-2011, 11:34 AM
 

1 posts, read 8,648 times

Reputation: 12

I am in escrow on a 203k loan for a home that needed less than $5,000.00 in "repairs". This home was no different than many of the foreclosed homes that we've looked at as far as needing "maintenance" because it was vacant for over a year. I want to make this clear to anyone considering a 203K through BofA...Turn away, don't look back..wait for another home or find another form of financing. Many of the stories you have read hear are true. We are not first time homebuyers..and this has been a nightmare, fraught with deception and over regulation. If you are considering doing some of the repairs as a homebuyer..forget about it. The earlier post of having a contractor hire you as a non-paid sub contractor seems a way around it but don't know the legal/liability issues. The banks dictate all of the terms in these loans..fees, etc. Closing costs are far above a standard FHA loan. Interests rates are at least .25 percent higher than an FHA loan. In our case, all of this should have been our sign to run. Having completed our inspections and having committed over $1,000.00 to this..it's before us to walk away..or continue through this nightmare. Walking would be painful but maybe a fraction of the pain of continuing..tough choice we have. To the poster earlier that said there is a lot of misinformation being spread here...seems the people are pretty accurate on their observations..you must be profiting mightily on the people who get sucked into this scam.

Reply With Quote Quick reply to this message 02-09-2011, 09:30 AM
 

2 posts, read 11,483 times

Reputation: 11

The other options are using a conventional and you would have to put down 20% or pay the $5000 cash out of your pocket for the repairs. Most people don’t have the extra money lying around to do repairs once they have purchased a home. This loan allows a person to purchase a home and get the repairs done all in one loan. .25% increase in the rate is a fair deal if you can't pay for the repairs yourself. BOA does not allow borrower help or "sweat equity" unless you can prove you are a licensed professions aka plumber, electrician. The reason is when borrowers attempt to do their own work they general do a substandard job, take too long to complete and the bank is not guaranteed the work will increase the value of the home. Remember there is always the option of a cash sale next time.

Reply With Quote Quick reply to this message 02-10-2011, 01:19 AM
 

1 posts, read 8,600 times

Reputation: 11

Default wow! This all really makes me nervous. My hubby and I have found a house that we would really like to use a 203k loan on( not the streamline one)....and a local broker thats done them before. this house needs about 50k in repairs/updates. Now, I am going to ask who the invester/lendor is that's going to be servicing the loan...hopefully its not BOA. Who else has a bad reputation? wells fargo? My broker (Just met him over the phone 2 days ago.so dont really know him well) says a typical 203k loan, talked about on the HUD website, requires a 650 score ..but that the lenders, since they are more picky..require a 660. Do you all agree on this? also...my hubby was a local builder here, until around late 06 when the housing market crashed. he held his general contractors license for awhile after that, but with all the fees/insurance, etc, he finally let it expire. That was really heartbreaking for him. Anyway..do any of you think..that he could possibly do ANY of the work, if he was a previous builder? maybe if he had references? He still at times, contacts his old subs..they all became his friends..the plumber, the electrician....the roofer, the drywall company owner, etc. He could get references. I just know he would HATE..living in a house, while its being remodeled, and not being able to lift a paint brush. Actually, I would hate that too...lol..I love to decorate. I would however, on the flip side..hate to have them do the jobs, and then NOT get paid on time....which brings me to another question.. If you do NOT get a draw at the beginning of the remodel process...after the closing...then do the people doing the work, have to have accounts at the places they are buying the materials from? What about kitchen cabinets? Most the time they are ordered, and take 4-6 weeks to be delivered...(if they are not being custom built right there in your kitchen). who pays for them? they have to be purchased right away. what about the plumber? he doesnt' have the money to go buy a tub, shower, faucets, sinks, vanities, dishwasher..etc, and not get paid on it for a long time. I'm so perplexed about this. Especially about the kitchen cabinets...I don't want them from home depot...lowes, etc. I'm sure they have to be purchased...BEFORE they are going to be built, and brought to me! Any knowledgeable people know these answers? one more..what if my husband HAD a contractors license NOW...and had the proper insurance, etc...could he THEN do anything on his own house, with this 203k loan? like..could he be the contractor...and turn in all the bids...do what he wants himself, and hire his old subs for the rest? thanks...

Arkansas girl

Reply With Quote Quick reply to this message 02-11-2011, 05:27 PM
 

18 posts, read 73,098 times

Reputation: 14

Wow. After reading all these posts I am VERY glad we opted for the FHA over 203k, which was the loan process we started. Then the lender told us we had to pay a $500 appraisal, a $1,000 consultant fee AND our closing costs were estimated to be $18,000. The interest rate was 5.25%. I almost passed out. We very quickly decided to switch to an FHA with TD Bank. They paid the appraisal fee, closing costs are estimated to be $11,000 LESS than the 203k, an interest rate of 4.25 AND we got our clear to close in 30 days from the start of the loan app.

My heart breaks for everyone stuck in housing limbo. The 203k seems like a painful process. Even though the house needs repairs, we decided to leave the government out of the process.

Reply With Quote Quick reply to this message 02-12-2011, 12:58 AM
 

553 posts, read 763,796 times

Reputation: 288

I do not quite understand it. If, for instance we were going to put 40K in downpayment but find the house that needs repairs (an will therefore cost less), we will only put 30K down and spend some money upfront on the repairs. Why do we have to get this rehab loan?

Reply With Quote Quick reply to this message 04-24-2011, 01:44 PM
 

1 posts, read 8,302 times

Reputation: 17

Default 203k Not a Scam but Not Good Either. The 203k home loan is great...on paper from people selling the option. It's good for: loan officers banks contractors consultants appraisers inspectors underwriters But it's [mod]language[/mod] for someone trying to buy a house, and for anyone who knows how to wield a hammer. It's only a good loan option maybe when the moon is in the seventh house and Jupiter aligns with Mars, or something like that. But, for those of us who are working people and have limited options to purchase, little savings (because we don't make much money anyway, and we already pay high rent) and would rather buy something and pay a mortgage for equal or less than the rent we currently pay in this market, the 203k is what we got. Unfortunately from my experience, the HUD website is sh-ite as far as describing the process and detailing what needs to be done: because the process is magic. And sometimes, your lender will require higher standards anyway i.e. you can do the work, unless the lender says no, and they will most likely say no unless you're a licensed contractor. Because you have to be licensed to figure out how to paint or repair an old window. Disclosure: I just got my deal nixed by an underwriter because the appraiser said the boiler was inoperative, and the water does not run in the house. But these people fail to realize the natural gas is not turned on, and the old galvanized pipes are in the process of being replaced by the seller (about 20' of PEX tubing in a small old house from the water main.) The appraiser also said there is a hole in the ceiling. Yes- that "hole" was created by the dewinterizer people taking the cover off the access to the attic, because the appraiser was required to look up there. And there was garbage on the basement floor- yes because the pipes were in-process of being replaced. And there is a boarded up window-yes because that is where a AC unit would go- and it's been there since the first inspection, asshat. Your contractor bidding process will be painful and they will give you large ranges of numbers so they can get the job and then try to fleece you. Your seller might also hold you up due to various obstacles.

Summary: do the 203k if you have no other options and expect to deal with The Army of the Obtuse.

Last edited by Green Irish Eyes; 04-24-2011 at02:47 PM .. Reason: Bypassing the language filters

Reply With Quote Quick reply to this message 04-25-2011, 01:10 PM
 

Location: clifton heights, PA

76 posts, read 389,938 times

Reputation: 39

I too have been house hunting...seems the houses that catch our eye are either AS IS or short sales, etc...and it clearly says conventional fin. or great for a 203K...we want to go regular FHA, but these homes would never pass an FHA approval obviously...Dont want to go conventional cause dont have tons of money to put down to get the house THEN turn around and do repairs, cause we wont have money for that. trying to find house that take FHA but in our budget bracket there isnt many, or they have teeny tiny yards, not good for dogs or lounging in, or shared driveways that my H hates...this 1 single we saw has all we like, but its conventional fin...and its a short sale....been thru it 2x and it has lots of potential, needs a new kitchen and a shower tub surround, and cleaned out and up from what we see... who knows what an inspector would find.....so we are looking into a 203K.. our budget can only go to a certain amt. so we would have to get the house for a lower price in order to have a decent amt of money to work with....asking 99K been on market almost a yr..

our realtor works for century 21 alliance in PA. and he referred us to their first american mortg comp 203K man. thats all he does is these loans and he has been doing them for yrs and knows all about them...this mortg comp does all their stuff there. underwriting loan officer realtors all together... very informative too.... he said once u put an offer in and its accepted, then they have inspectors for 400 that come out and see whats up with the place...house to meet all FHA criteria 1st and foremost, so whatever is needed to bring it to that standard gets done 1st, then whatever else above that and what u want gets done.....lets face it, if house was FHA it wouldve been bought up right away, but since the people left mess and food and trash and their junk all over on top of needing a kitchen and cleaning the yard and all up, it wont pass FHA....surprised an investor hasnt swooped in to buy it....we are waiting for our realtor to contact the agent of that house to find out about the prev inspection that was done , laws require anything major or structural should be disclosed to potential buyers, so she wants to see if he will give her any info on prev inspection and whats up with this house and beings its a short sale if they are willing to do any S/A or want a 203K buyer......i have been reading HUD site on this loan and asked questions to the 203K man, but still not sure if its the way to go.....He said they have their own consultants and he will stick with u thruout the job, like a gen contractor/foreman will oversee work being done and they have workers and companies that know about this program and how it works, so they know what to expect.....so we will see i guess. mean time im going to keep looking. dont want 1st house to turn into a nitemare and cost us more then we can afford....

Reply With Quote Quick reply to this message 04-25-2011, 01:18 PM
 

Location: clifton heights, PA

76 posts, read 389,938 times

Reputation: 39

JOSIE ALLEN, 203K is NOT for homes that WILL pass FHA criteria....if the house listing doesnt say FHA, that means there is something that wont pass FHA approval for them to finance it, thats why 203K is an option....if this house i am interested in was regular FHA id have been moved in by now cause it passes FHA standards... BUT agents and sellers know that a house wont pass FHA standards so thats why u cant finance that reg way....thats whats so backwards with the market

u see a house u put an offer in, get it inspected only to find out it needs ton of repairs or whatever, then u cant retract your offer to put a lower bid in after that....u can back out of whole thing, but if u like the house not like u can THEN say well id like to put a lower offer in....all u can do is negotiate with seller to do things or u get price lower if u have to do it...cant win unless people have money...hate to say it but in most instances it does make world go round

Reply With Quote Quick reply to this message 07-11-2011, 05:02 PM
 

1 posts, read 8,030 times

Reputation: 12

I'm currently working with Wells Fargo on a 203K loan for a foreclosed household I will be buying for a mere $27K. I've put together bids from different companies around town for the extensive renovation to be done in order to bring the place to code (full electric update from 60amp fuse panel, new roof, exterior paint and some siding repair, as well as full inspection for structural/plumbing/termite/radon/etc. contingent with the sale) and will very likely finance the whole thing in just under $34K in one low-interest (I have AWESOME credit) 30-year fixed mortgage. I am a single 22 year old part-time student making almost $26,000 per year, buying a house with an AS-IS value of almost $60K. Gripe all you want about being screwed over on a $305,000 home, but the 203K program is EXACTLY what an ambitious girl like myself can use!

Reply With Quote Quick reply to this message 07-11-2011, 06:30 PM
 

Location: Lemon Grove, CA, 91945

4,558 posts, read 7,394,085 times

Reputation: 1744

I agree with both sides of a 203k. Its a great loan to get if you know what you are doing with it AND know somewhat about home valuations in the market you are looking in. IMHO they are superb for areas that are not overly dense. For example, in San Diego is pretty tough to really get something decent with a 203k unless you are wayyyy out east or in a more rural area. Why? Because if a property was really that good, a cash buyer or investor would just swoop up and grab it. There are many many hoops to jump through and if you are unorganized in any way shape or form, it can slow the process down to a crawl. There arent too many lenders that do 203k's nor are there really any decent loan officers that deal with them effeciently. Banks treat the mortgage and k loan as seperate even though when everything is said and done, its one payment.

I feel bad for some of you that thought it was something that it was not. But there is no free lunch so to speak anymore. The 203k loans and streamline K are what they are and I dont think they ever promised to be more than that. It says what it does in the documentation.

Reply With Quote Quick reply to this message Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


Page 5

My husband & I accepted this loan with poor guidance from New Penn Financial, BOA and our loan consultant. Our 203K consultant recommended the contractor. Now we are be evicted from our home because the contract and consultant never pulled the permits. County inspectors found live uncapped wires through out the home. The home required mold remediation, but the contractor's chect was return so the remediation company stopped work, so the contractor falsified a document stating the mold remediation was complete. We have hot water running to the toilet, air ducts not connected, insulation not installed and the list goes on. My contractor Hobby Building & Design was paid over $90,000 to rehabilitate the house and now we are looking at $72,000 to correct is poor workmanship. This loan has been a horry story. New Penn Financial lied about deferring the payments until the rehab was complete, the 203K consultant released money to the contractor without the work being complete and without permits being pulled and Bank of America is holding the last $23,000 of our funds because our 203K consultant has been caught in too many lies. The program does not have enough failsafes in place to protect the buyer.

Quick reply to this message

Page 6

Beware of the 203k loan. I am in the process of closing one and encountered some pretty shady behavior, and I believe this is a result of the 203k consultant receiving a fee based on 1% of the repair cost. My 203k consultant during the walk-through kept pressuring me to add non-essential items to the scope of work, and I had to keep telling him no. Eventually I started getting confused what was required and what was optional, so the scope ended up having large cost, non-essential items like rewiring the house. Next, I got 4 bids from contractors. 3 of them came in at nearly the same ridiculously high price, which seemed very suspicious. Then the 4th came back quite a bit lower, and the contractor informed me that the 203k consultant was questioning his bid and pressuring him to pad the numbers. I am now in the process of switching 203k consultants and trying to fix the scope of work, all in a tight timeline. At this point, if I don't close on the house, it will have been a huge waste of time and effort. If you must go with the 203k, I would recommend having the contractors have no contact whatsoever with the 203k consultant, if that is possible.

Reply With Quote Quick reply to this message

Page 7

09-15-2015, 05:48 PM
 

18 posts, read 14,095 times

Reputation: 10

As we all know when you close on a primary residence there is a Mortgage clause that states you must have occupancy for one year, what happens if you lose your job within the year or decide to quit, will you be able to rent out the property due to "unforeseen" circumstance ?

Reply With Quote Quick reply to this message 09-15-2015, 10:28 PM
 

Location: MID ATLANTIC

6,554 posts, read 14,497,931 times

Reputation: 6227

When you signed your note and deed of trust, I am sure you intended to live there forever. Then you have the sh1tstorm of life. When you signed, intent was to live there indefinitely. If you put the home on the rental market before the first payment, it may be problematic. If you can document the job loss, you hav


Category: Bank loan

Similar articles: