January 17, 2011
The FHA and HUD issue loans to homeowners who want to initiate home improvement projects. Some FHA insured loans require the borrower to complete the work, submit a list of costs and get reimbursed for the amount of the improvements or upgrades. Others may allow energy-efficient upgrades or improvements as part of a construction loan or other FHA mortgage loan product.
One of the home improvement programs is known as Title I, a program that allows “light” or “moderate” property rehab. According to the FHA, the Title I program has in the past attracted contractors who performed substandard, over-priced work for Title I borrowers.
“Some deceptive contractors in the program were performing shoddy work,” the HUD official site says, “falsifying documents, and overcharging homeowners. This fraud had victimized thousands of families and cost the taxpayers millions of dollars.”
To avoid this, the FHA and HUD advise property owners to work only with HUD approved Title I lenders. According to HUD, “This allows you to select the contractor and helps to prevent inflated estimates that only increase costs. ”
The FHA and HUD encourage borrowers to report questionable or fraudulent practices by Title 1 contractors. Call 1-800-347-3735, TTY 1-202-708-2451 or send a fax to 202-708-4829 to file a complaint.
Title I loans can go from $5,000 to the $20,000 range on single family properties for qualified borrowers. Multi-family homes and manufactured homes also qualify. For manufactured or mobile homes, the property must be listed as “real property” in order to qualify for the maximum loan amount.
Bruce Reichstein has spent over three decades as an experienced FHA and VA home loan mortgage banker and underwriter where he was responsible for funding “Billions” in government backed mortgage loans. He is the Managing Editor for FHANewsblog.com where he educates homeowners on the specific guidelines for obtaining FHA guaranteed home loans.
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