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Catalog of Federal Domestic Assistance

Program Descriptions

14.108:  Rehabilitation Mortgage Insurance

Popular Name:  203(k)

Objectives:  To help families repair or improve, purchase and improve, or refinance and improve existing residential structures more than one year old.

PROGRAM AND AWARD	FINANCIAL AND INFORMATION CONTACTS
ELIGIBILITY REQUIREMENTS	FINANCIAL AND ADMINISTRATIVE INFO.
APPLICATION AND AWARD PROCESS	INFORMATION CONTACTS
RELATED PROGRAMS	ASSISTANCE CONSIDERATIONS
PROGRAM ACCOMPLISHMENTS	POST ASSISTANCE REQUIREMENTS

14.108 ELIGIBILITY REQUIREMENTS:

Applicant Eligibility:  Individual purchasers or investors are eligible to apply.

Beneficiary Eligibility:  Individual purchasers or investors.

Credentials/Documentation:  Documentation regarding the characteristics of the property and the qualifications of the borrower are assembled by the lender and submitted with the application. This program is excluded from coverage under OMB Circular No. A-87.

14.108 APPLICATION AND AWARD PROCESS:

Preapplication Coordination:  None. This program is excluded from coverage under E.O. 12372.

Application Procedure:  Application is submitted through a HUD approved lending institution. This program is excluded from coverage under OMB Circular Nos. A-102 and A-110.

Award Procedure:  See Application Procedure.

Deadlines:  None.

Range of Approval/Disapproval Time:  Varies.

Appeals:  The lender or HUD will state the reason for refusing an application. The applicant may reapply subject to concurrence of the lender.

Renewals:  Not applicable.

Criteria for Selecting Proposals:  Not applicable.

Examples of Funded Projects:  Not applicable.

Range and Average of Financial Assistance:  Maximum insurable mortgage loans for an occupant mortgagor are the same as prescribed for Section 203(b) - Program 14.117. Rehabilitation cost must be at least $5,000.

14.108 RELATED PROGRAMS:

• 14.117 Mortgage Insurance: Homes;
• 14.120 Mortgage Insurance: Homes for Low and Moderate Income Families;
• 14.172 Mortgage Insurance: Growing Equity Mortgages.

14.108 PROGRAM ACCOMPLISHMENTS:

In fiscal year 1999, 13,039 loans were insured. The Department expects to insure a similar number of loans in fiscal year 2000.

14.108 FINANCIAL AND ADMINISTRATIVE INFO:

Federal Agency:  HOUSING, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Type of Assistance:  Guaranteed/Insured Loans.

Obligations:  (Loans insured) Reported under program 14.133.

Budget Account Number:  86-4077-0-3-371.

Authorization:  National Housing Act, as amended, Section 203(k), Public Law 95-557, 12 U.S.C. 1709, 1715(k).

Regulations, Guidelines, and Literature:  HUD Residential Rehabilitation Program, no charge; Fact Sheet: Rehabilitation Mortgage Insurance, no charge. 24 CFR 203.50.

14.108 INFO CONTACTS:

Regional or Local Office:  Persons are encouraged to contact the Homeownership Center serving their State, or the nearest local HUD Office. See Catalog address appendix for a list of offices.

Headquarters Office:  None.

(See Appendix IV for more contact info.)

14.108 ASSISTANCE CONSIDERATIONS:

Formula and Matching Requirements:  The maximum loan amount is the same as Section 203(b) - Program 14.117. Value is determined by either (a) the value of the property before rehabilitation plus the cost of rehabilitation, or (b) 110 percent of the appraised value of the property after rehabilitation, whichever is less. The loan may be subordinated to an existing first mortgage, or there may be insured advances during the rehabilitation period if the loan is a first lien. The lender may charge the greater of $350 or an additional 1-1/2 percent supplemental loan origination fee for the portion of the loan which is allocated to rehabilitation when there are insured advances. Also, the lender may charge the mortgagor fees in the nature of discounts.

Length and Time Phasing of Assistance:  The mortgage term may extend for 30 years.

Uses and Use Restrictions:  HUD insures lenders against loss on loans. These loans may be used to rehabilitate an existing 1 to 4 unit dwelling in one of four ways: (1) Purchase a structure and the land on which the structure is located and rehabilitate it; (2) purchase a structure on another site, move it onto a new foundation on the mortgaged property and rehabilitate it; (3) refinance the existing indebtedness and rehabilitate such a structure; or (4) rehabilitate such a structure. Maximum insurable mortgage loans for an occupant mortgagor are the same as prescribed for Section 203(b) - Program 14.117. Rehabilitation cost must be at least $5,000.

14.108 POST ASSISTANCE REQUIREMENTS:

Reports:  Defaults in meeting the mortgage terms must be reported. All approved mortgagees at any time upon request by FHA must furnish a copy of their latest financial statement.

Audits:  The Department of Housing and Urban Development reserves the right to audit the account of the mortgagee to determine its compliance and conformance with FHA regulations and standards.

Records:  Mortgagees are required to service and maintain records in accordance with acceptable mortgage practices of prudent lending institutions and the FHA regulations.