FHA promises updates to its renovation programs
As part of its plans to address the housing shortage, the Federal Housing Administration plans to revamp its Section 203(k) home improvement loan, senior Department of Housing and Urban Development officials said. .
Lenders have increased their involvement in home improvement products as refinancing declines and owner’s tenure continues to rise. The average time homeowners spent in a home hit a record 10.6 years in May, according to First American.
The FHA program allows borrowers to finance home improvements for purchase or refinance, but has had its ups and downs over the years. As early as 1999, a Government Accounting Office audit accused HUD of disregard 203(k).
Although it is an important product for housing rehabilitation and renovation, it has not been modernized for some time and its uses have remained narrow, an official explained during a briefing.
It is therefore a priority for the FHA to update 203(k) and make it more useful for today’s housing market.
Another home improvement product insured by the FHA is the Title 1 ready and its use cases include manufactured homes as well as real estate.
But, like 203(k), it also hasn’t received FHA attention for a long time, until now. The agency has updated some of the terms of how the Title 1 program works to make it easier for lenders to understand and implement, but it is also considering raising its lending limits to a level appropriate for today’s housing market, a said the manager. .
Meanwhile, discussions about increasing the use of accessory accommodation to meet housing supply needs have taken place between various stakeholders, which has aroused the agency’s interest.
But as this increases the visibility and importance of manufactured homes in the program, the FHA is also considering what it can do about ADUs, for which it currently has no specific program, HUD officials said.
The agency is also working to increase the number of FHA-insured low-balance mortgages. Officials noted that the economics of mortgage business favor lenders who prioritize applications with larger balances, primarily due to the compensation structure.
Another initiative is to update its Manufactured Home Construction and Safety Standards, more commonly known as the HUD Code.
This proposal will enable the production of manufactured homes with features that are demanded by consumers and are more comparable to site-built homes, such as pitched roof designs, open floor plans, and multi-unit dwellings.