Do you need a HUD 203K Consultant even if you have a HUD 203K Streamline Loan?

Part 1 – Introductions and Q & A’s:


As potential home buyers, you have an opportunity to purchase the home of your dreams thru a variety of different ways. From a traditional home buying process (FHA, VA, etc…) or thru a home that was foreclose or a HUD home or a Real Estate Owned (REO). The second thru forth choice you could save substance dollars in your wallet and get in the neighborhood of your dreams.

Once you pick your home, you want to remodel it so it can look like the house of your dreams. One of the options that you have is getting a HUD 203K loan. If you look at your property and you see that you may need just minor building repairs, then you can go with a HUD 203K Streamline Loan in which you can get a loan up to $35,000.

If you are going that route, one of the things that you will be ask is do you still need a 203K Consultant?

The answer is…

Well before I answer that question, here are a few questions and answers that you may encounter during the home buying process that you can think about…

  • Can the Mortgagees do his/her inspections and/or repairs?

(From HUD Enhancements to “Streamlined (k)” Limited Repair Program Mortgage Letter 2005-50)

The mortgagee may choose to obtain or perform inspections if it believes such actions are necessary for program compliance and/or risk mitigation. In addition, mortgagees may also ensure that the repairs and/or improvements have been completed by obtaining contractor’s receipts or by a signed Mortgagor’s Letter of Completion. If the mortgagee determines that an inspection(s) by a third party is necessary to ensure proper completion of the proposed repair or improvement item, the mortgagee may charge the borrower for the costs of no more than two inspections per each contractor. Note: For repairs in excess of $15,000, the mortgagee must perform or obtain an inspection of the completed work by a third party.

  • What are the mortgagee’s requirements for examining the contractor bids? For paying the contractor prior to beginning construction? For inspections of the work?

(From HUD Enhancements to “Streamlined (k)” Limited Repair Program Mortgage Letter 2005-50)

While mortgagees are not contractors, participation in this program requires that they examine the contractor’s bid(s) and determine that they fall within the usual and customary range for similar work. Payments in advance of construction: The mortgagee—at its discretion—may provide the contractor with up to 50 percent of the estimated cost of any work item prior to beginning construction. Such payments should only be made where the mortgagee is satisfied with the reputation of the contractor(s) and the contractor is not willing or able to defer receipt of payment until completion of the work or the payment represents the cost of materials incurred prior to construction.

This is just a few Q & A that you may encounter. Stay turn for more on this subject in the coming weeks. Feel free to comment if you have any questions or comments.