Long Beach, CA-There is a need for mortgage originators to get the word out about the Federal Housing Administration 203(k) Streamline because it meets the needs of today's marketplace, especially for first-time homebuyers as well as purchasers of real estate-owned properties, the national training director of Plaza Home Mortgage said.
Among the targets originators should be marketing for the Streamline program, Ginger Bell told a meeting of the California Association of Mortgage Professionals here, are those first time buyers, although the program can be used for all buyers as well as for refinancings.
However, Bell said, 95% of the business Plaza does in the Streamline product is purchases. She added Plaza does not originate the traditional 203(k) loan.
Other targets include borrowers who do not qualify for conventional financing because of downpayment issues or lack funds for closing costs, plus those people who live in "disadvantaged neighborhoods."
The program cannot be used for structural repairs to a property. However, Bell noted, many REO, foreclosure or short sales are of properties with incomplete renovations or have outdated kitchens or bathrooms.
She told a story about a real estate agent who told his clients not to do any renovations and just market their property as is. The seller's agent did not know about the Streamline product, but fortunately the buyer's agent did.
So educating referral partners such as Realtors, accountants, attorneys, financial planners and insurance agents, regarding the program, Bell said, is important. Education does not stop there, because originators also need to educate borrowers and their community about it as well.
She suggested doing webinars for referral partners, which for this product could even include remodelers, roofers and contractors. Combine your database with theirs to do co-marketing.
For consumers, send out updates, including before-and-after pictures of properties the program has successfully updated. She also suggested getting testimonials from past clients.
Another way to get out the word about the program is to get on radio or television and write newspaper articles.
But to successfully do the product, Bell said, there is the need to create your team of real estate agents and good contractors. Because of the rules of the product, speed is of the essence.
"Let them know this is a team sport," Bell said. Part of the reason is that all contractors get paid 50% at the loan's closing, but the remaining 50% is not released until the last contractor completes its work.
Lynda Nolan, underwriting manager for Plaza, added that another reason to like the Streamlined product is that the "full 203(k) can be a little intimidating."
Turning REO into viable homes is a win for the buyer, a win for the seller and a win for communities.
But, she added, the product is not just for distressed properties. One of the allowed uses for the Streamline product is mold abatement as well as mitigating insect and rodent infestation.
Following up on Bell's point about the team issue, Nolan said contractors needed to know the program's requirements so they can properly issue bids.
As a lender, Plaza likes to know it is working with a contractor that will not just run off with the money, she said.
