As the Obama Administration examines options to expedite the sale of foreclosed properties, the Federal Housing Administration is weighing a tweak to its 203(k) program, opening it once again to investors.
FHA acting commissioner Carol Galante told National Mortgage News that re-opening the 203(k) to investors is under consideration, but a decision has not been made yet. "It's still on the table," Galante said.
For 15 years FHA has maintained a moratorium on allowing investors to use the 203(k) program because of past abuses.
Owner-occupants continue to use 203(k) loans, which allow the borrower to finance both the purchase of the property and upgrades into one high LTV mortgage guaranteed by the government.
In the current REO market small investors are playing a significant role in turning foreclosed homes into rental properties, but many are using cash.
Under present rules Fannie Mae limits financing per-investor at 10 loans and Freddie Mac has a five-loan limit.
