August 15, 2016
The FHA has amended policies for the FHA 203(k) Rehabilitation Mortgage Insurance Program where the 203(k) Consultant Draw Inspection Fee is concerned. According to the FHA official site, the rule change is designed to revise the maximum fee that may be charged by a 203(k) consultant for the “Draw Inspection”
Mortgagee letter 2016-12 states that the FHA and HUD continue to “analyze the overall Consultant Fee structure” established in 1995 for FHA rehab loans. In doing so, the FHA and HUD have “determined that the current $100 limit on the Draw Inspection Fee discourages consultant participation in the Section 203(k) program and has the potential to limit access to credit.”
Consequently, the FHA has revised this fee limit. “The Consultant Draw Inspection Fee is amended to permit a fee that is reasonable and customary for that area provided such fee does not exceed a new dollar limit”. That limit is now set at $350.
For each draw request, FHA loan rules now state, ” Consultant may charge an Inspection Fee that is reasonable and customary for work performed in the area where the property is located, provided the fee does not exceed a maximum of $350″. Each area may have a different “reasonable and customary” fee for this type of service, so the actual dollar amount will vary depending on the housing market.
Such changes often happen when rules enacted years ago become outdated due to changes in the economy, the need for more flexibility in the regulations or other factors that require a review of the old requirements. In other cases, changes in federal law or the FHA loan program itself may make such alterations necessary.
This particular change is effective immediately, and borrowers who have questions on how this rule change may affect their transaction should discuss their concerns with a loan officer. You can also contact the FHA directly for assistance with this or other questions by calling them at 1-800 CALL FHA.
FHA 203(k) rehab mortgages allow borrowers to buy or refinance properties that are in need of repairs. The property to be purchased or refinanced with an FHA 203(k) rehab loan must meet certain energy efficiency and structural standards once the rehab is complete.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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