Clarification on who decides 203k repairs? (insurance, loan, requirements, loan)

[Visfire]

Hello everyone, I'm writing here w/ hopes that a FHA knowledgeable person can reply to clear up some confusion that has arisen for my home purchase.

Background
Currently, I'm under contract on a bank owned property for which I am using a 203K streamline loan (not regular 203k or regular FHA loan). The purpose of the streamline is to address relatively minor issues on the property that were discovered during the inspection that I ordered. My inspector that I hired was a 203k consultant/inspector.

The situation
It is my extreme preference to do as little as- to no work on this property now. Yes, I do want it fixed up, but I want it done right, not rushed, and certainly not all at once.

The inspector's report dinged many items and I believe many of the items are not requirements that need to be fixed right away such as
- cracked pavement, worn carpets, missing sponge-like ceiling tiles, cracked glass

And there are items that will need to be addressed like chipped paint, handrails, and water heater all of which I'm fine with.

My confusion

I contacted my underwriter (wells) and informed them of the items that I don't believe need to be fixed and I referenced this HUD Letter that I've attached to this post.

My underwriter states that they contacted my inspector, who in turn, informed them that all the repairs are required under FHA guidelines.

Then

I contacted my inspector who informed me that the total of repairs that are required are up to my underwriter and appraiser. In reference to the attached letter, it was stated that the letter only applies to regular FHA loans and not Streamline.

My question

Who do I need to contact in order to address and correct the inspection report w/ regards to Minimum Standards for Repair? It makes no sense to contact the appraiser since the work hasn't been done yet, and I doubt my underwriter keeps up w/ current regulations

Was I being misled or are the repair requirements really different for the normal FHA loan vs the Streamlined? And if so, where are these requirements located?

I've send the above questions to HUD and received no response

Thanks for your help,

[chet everett]

Your underwriter and you need to be on the same page and that is shttp://www.hud.gov/offices/hsg/sfh/203k/faqs203k.cfmimple:

[Visfire]

Thank you all, very helpful. . I'll keep you posted

[goldin3662]

Can the bank withhold the final payment to the contractor, because they want him to do additional work outside of the original contract because they claim to have a need for "fha compliance"???? Is that legal?

[chet everett]

Originally Posted by goldin3662

Can the bank withhold the final payment to the contractor, because they want him to do additional work outside of the original contract because they claim to have a need for "fha compliance"???? Is that legal?

The whole reason te Federal Housing Adminiatration is involved in the 203k loan program is they want the quality of the home to be improved. If the repairs are not done satisfactorily then the contractor should not e paid.

[ShanetheMortgageMan]

Originally Posted by goldin3662

Can the bank withhold the final payment to the contractor, because they want him to do additional work outside of the original contract because they claim to have a need for "fha compliance"???? Is that legal?

What additional items are needed? Were those items noted on the appraisal used for the loan approval?

[josie_allen]

The only difference between a regular 203k and a 203k streamlined is the nature of the repair. You can use streamline if there are no structural changes (i.e. moving a wall) but other than that, it's very similar. Ultimately the 203k consult needs to green-light all the repairs and they do have to meet FHA criteria. Repairs must be completed within 6 months of your purchase. The differences with the 203k and standard FHA is that for an FHA, the house must be move in ready and you must owner-occupy at closing without needing to make repairs. FHA appraisers (not inspectors) look for basic safety issues and can require that repairs be made prior to closing (such as peeling paint, depending on the age of the house, and various other safety hazards or something that would affect the bank's ability to sell the home should you default on the loan).

If you get the gov. involved in a 203k, ultimately THEY make the decisions on repairs, not you. Perhaps a reason to avoid a 203k unless you're prepared to deal with red tape.

See the following site, click on guidelines by state.

203K Rehab Loan Insurance - HUD

[cwaggy]

If you are buying a home through the 203K program PLAN ON INSTALLING A NEW FIRE AND CO DETECTION and WARNING SYSTEM THAT MEETS THE NATIONAL CODE. Sheesh.