Louisville Kentucky FHA 203K Streamline Program


FHA 203K Streamline Program Louisville Kentucky FHA 203K Streamline Program

FHA 203K Streamline Program

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The FHA 203K Streamline Program provides up to $35,000 toward property repair or rehabilitation, and combines it with funds needed to purchase or refinance.  Only one appraisal is required to show the value with the improvements.

If the lender is a Third Party Originator (TPO), the borrower is given three months from the closing date to complete all work.  KHC oversees the repair escrows for TPOs and requires the TPOs to charge a Supplemental Origination Fee, calculated as the greater of $350 or 1.5 percent of the rehabilitation cost (reflected on page 2 of GFE in Block 1).  This fee is paid to KHC for maintaining the repair escrows.

If the lender is an FHA Mortgagee, they may follow FHA agency guidelines regarding the allowable time period for work completion.  The FHA Mortgagee must oversee their repair escrows, and may charge the Supplemental Origination Fee.  Full information is available in the documents below

 

KENTUCKY HOUSING CORPORATION
FHA 203K STREAMLINE TPO QUICK REFERENCE GUIDE
Page 1 of 2 5/30/2012
Program Overview
The FHA 203K Streamline Program provides up to $35,000 toward repair/rehabilitation.
This program combines funds needed to purchase or refinance along with the funds needed to repair/rehabilitate the property. The borrower is given three months from the closing date to complete all the work.
Procedures All standard FHA borrower and credit underwriting guidelines apply. 10% contingency required (inclusive of the $35,000). Submission package must include203K worksheet (HUD-92700), FHA Underwriting and Loan Transmittal Summary (HUD-92900 LT), executed Homeowner/Contractor Agreement and all repair bids. A Supplemental Origination Fee must be charged. The Supplemental Origination Fee is calculated as the greater of $350 or 1.5% of rehabilitation cost (reflected on page 2 of GFE in Block 1). This fee will be paid to KHC for maintaining the repair escrows. Regular DAP may be used. Home DAP cannot be used with the FHA 203K Streamline.
Eligible Improvements
Repair/Replacement/Upgrade:
o Roofs, gutters and downspouts, HVAC systems, plumbing, electrical, and flooring Painting, both exterior and interior Minor remodeling, such as kitchens, but no structural repairs Weatherization, including storm windows and doors, insulation, weather stripping, etc. Purchase and installation of appliances including:
o Free standing ranges, refrigerators, washers/dryers, dishwashers, microwave ovens Accessibility improvements for persons with disabilities Repair/replace/add exterior decks, patios, porches Basement finishing/remodeling and waterproofing, but no structural repairs Window/door replacements and exterior wall re-siding Septic system and or well repair or replacement
Ineligible Improvements
Major rehabilitation/remodeling, such as the relocation of a load-bearing wall, new construction (including room additions), repair of structural damage, landscaping, lead-based paint stabilization or abatement of lead-based paint hazards and any repair causing the mortgagor to be displaced from the property for more than 30 days.
Contractors and Rehabilitation Criteria:
Must use contractors to complete the repairs and rehabilitation

 

Contractors and Rehabilitation Criteria:
Must use contractors to complete the repairs and rehabilitation
The Contractor(s) must be licensed with the State of Kentucky (if applicable) and provide evidence of insurance at time of loan submission. http://www.contractors-license.org/ky/Kentucky.html (to check if contractor is licensed) Two bids are required for each work item to show cost is customary for area. The cost estimate must clearly state the nature and type of repair and the cost for completion of the work item(s). Breakdown of material and labor cost must also be shown. Additional cost estimates may be necessary. When purchasing appliances the invoices from dealer must be provided. Lender indicates which contractor’s bid has been chosen by the borrower so KHC can provide to the appraiser. The Contractor(s) must sign a Homeowner/Contractor’s Agreement to complete the work for the amount of the cost estimate and within the allotted time frame. The rehabilitation period begins when the mortgage loan is closed.

 

KENTUCKY HOUSING CORPORATION
FHA 203K STREAMLINE TPO QUICK REFERENCE GUIDE
Page 2 of 2 5/30/2012
Self-Help
Self-Help work items only permitted if borrower meets eligible contractor criteria and is currently employed in same profession as work to be performed (i.e.; borrower is a licensed plumber and will complete that portion of the work) A Self-Help Agreement is executed by the borrower and lender. Borrowers who utilize self-help will not be compensated for their labor, however the cost of labor will be included in the repair/rehabilitation cost (in case the borrower is unable to complete the work, and a contractor must be hired). Borrower to provide two estimates for each work item.
Appraisal Requirements Only one “after improved” appraisal (subject to completion of repairs) is required. Property value must be sufficient to purchase and complete rehabilitation
Eligible Property Types Single family residences, including HUD REO properties Manufactured Homes Condominiums (FHA Approved Condominiums)
o Must follow FHA Agency Guidelines.
Rehabilitation Period and
Disbursements
All work must be completed within three months from the loan closing. No more than two payments may be made to each contractor The first payment is intended to defray material costs and shall not be more than 50% of the estimated costs of materials and permits (use Disbursement Authorization Form). The final payment to the contractor(s) will be made following completion of all work using the Mortgagor/Contractor Letter of Completion. Once all work is completed then the lender will request a Final Inspection. Once KHC receives the Final clear Inspection, the escrow account will be finalized.
Change Order Guidelines If during the repair process there are unforeseen repairs necessary to complete the original work a change order must be approved by a KHC Underwriter The following must be submitted to KHC Underwriting Department;
o Two bids with labor and materials broken down for the change request.
o Completed HUD Form-92577 (change order request form). Once received, KHC will determine if there is enough money in the escrow account. If sufficient funds in the escrow account, the KHC Underwriter will sign and date form 92577 and fax back to the lender. If forms are acceptable but not sufficient funds in the escrow account, verify the borrower has sufficient funds to cover the changes. The funds must be verified, collected and deposited into the escrow account.
Closing Guidelines and Forms There will no disbursements advanced at closing. Once the repairs are completed with the funds appropriately disbursed, rehabilitation escrow account is closed out and FHA Connection is updated to show the close-out. The following documentation is required on all 203K streamline loans:
o Rehabilitation Loan Agreement: This agreement is between the lender and the borrower establishing

Rehabilitation Loan Agreement: This agreement is between the lender and the borrower establishing the conditions under which the lender will advance the 203K streamline mortgage proceeds and 203K Rider.

 

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3 thoughts on “Louisville Kentucky FHA 203K Streamline Program

  1. Pingback: FHA Streamlined Refi: Credit vs Non

  2. Pingback: Kentucky Housing Corporation first mortgage are eligible for DAP funds .Down Payment Assistance Program (DAP) « Kentucky First Time Home Buyer Mortgage Loan

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