REO's and FHA

User Forum Topic
Submitted by threadkiller on November 24, 2008 - 5:18am

After looking at many REO's, I've come to the conclusion that many are dumps. Will FHA approve a loan on housing that typically is missing appliances? Specifically missing a stove top,missing water heater, broken windows, minor termite or dry rote. I've heard of FHA's 203k, specifically the streamlined version, does anyone have experience here? I'm thinking Temeculaguy might know as I think a lot of the repos up there were trashed. Thanks in advance, I'd rather not learn the hard way.

‹ Any hope for VA/Cal-Vet? Need a mortgage broker ›
From my understanding,
Submitted by temeculaguy on November 24, 2008 - 2:48pm.

From my understanding, traditional FHA loans require the home to be livable (other lenders have similar requirements but fha and va are the strictest). Little things like light fixtures, lawns, ceiling fans, etc are excusable but the big stuff needs to be there, including flooring. I didn't end up buying a thrasher so I didn't have to cross that road, I'm too lazy. I am not familiar with the 203k, is that the loan where they loan you the rehab money as well?

FHA loans are subject to an
Submitted by SD Realtor on November 24, 2008 - 7:47pm.

FHA loans are subject to an FHA inspection. This must happen before you can get the approval on the loan. Unfortunately I have not had any of the FHA 203k experience so I cannot comment on that. Alot of times sellers are going to be wary of FHA financed buyers because the FHA loan will not go through unless the seller provides the repairs. Missing all of the items that you specified, I am not to confident that you would get the FHA loan.

I am an REO asset manager for
Submitted by winterpapa1 on November 24, 2008 - 9:57pm.

I am an REO asset manager for one of the major banks. One of the largest issues we have when preparing the REO for market is to decide what repairs to complete inorder for the property to be FHA financeable. The typical repairs are the obvious ( range/oven, water heater, any obvious electrical issues, plumbing etc.) FHA does not often require a fridge or dishwasher and the the requirements seem to vary from city to city and state to state. For example in AZ we were able to have a property close on an FHA with an unpermitted garage conversion, while in Riverside, CA we had the FHA kick back loans that had missing covers on the light switches. It really depends on the appraiser sometimes. FOr the most part we would rather just not deal with FHA, however in areas such as all of CA FHA loans are all we are seeing since borrowers have little or no money to put as a down payment. The 203k loans are quite difficult to get. What the 203k loan does is allow a buyer to purchase a home for 80k that needs 20k in repairs but will be worth at least 100k after the repairs are made. They let you close on the loan for 80k and disburse the 20k after closing to the FHA approved contractor to have the repairs completed. They are quite difficult to get and the list of repairs that are authorized can be found on the HUD website.

The "streamlined" version is
Submitted by threadkiller on November 24, 2008 - 11:32pm.

The "streamlined" version is up to $15,000 and from what I've read does not require sign offs on the repairs. However many people are unfamiliar with how it actually works so that is what I would like to get more info about, from someone that has actually done one. Thanks for all the above replies.