What is Streamline(K)?
- Enhancements to “Streamlined (k)” Limited Repair Program
- What improvements are eligible under the new Streamlined (k) program?
- What are the minimum and maximum amounts for repair costs under this program?
- Can this program be used for repairs and improvements on purchases of HUD Homes?
- What if the REO property requires lead-based paint stabilization?
- Can the Streamlined (k) program be used for refinancing the mortgage?
- What are the appraisal requirements under the Streamlined (k) program?
- What are the mortgagee’s requirements for examining the contractor bids? For paying the contractor prior to beginning construction? For inspections of the work?
- What are the mortgagor’s requirements for selecting the contractor? And what are the mortgagee’s requirements for review of the contractor and the rehabilitation proposal?
- What are the mortgagee’s requirements for paying contractors?
- May the mortgagee establish a Contingency Reserve?
- Is there a maximum mortgage amount worksheet that must be used?
- Can we combine the Streamlined (k) with an Energy Efficient Mortgage (EEM)?
- What are the “closeout requirements” under the Streamlined (k) program?
- Are there specific data entry requirements under the Streamlined (k) program?
- What items remain ineligible for the Streamlined (k) program?
- Read All Pages Together
On April 29th 2005 HUD announced (via – MORTGAGEE LETTER 2005-19) that they had developed a limited repair program, designated as the Streamline(K) Limited Repair Program. This new program was designed to augment its existing 203(k) program, the primary tool of the Federal Housing Administration (FHA) for providing insured mortgage financing for the purchase of single-family properties in need of rehabilitation.
It’s function was designed to facilitate purchase transactions in which the property needs minor rehabilitation work, as identified in a pre-purchase home inspection or the FHA appraisal.
The Streamline(K) program was assists homeowners with basic repairs costing between $5,000 and $15,000. But, unlike the standard 203(k) program, any FHA approved mortgagee may originate the Streamline(K) mortgage.
Later that year on December 29, 2005 FHA announced important changes to the Streamlined(K) program. The following details those changes.
Enhancements to “Streamlined (k)” Limited Repair Program
These changes are designed to be more reflective of the desire of many home buyers and existing homeowners to improve their homes including making them more energy efficient. It also includes:
- Additional eligible work items, including lead-based paint stabilization.
- Increased maximum mortgage amount for repair or rehabilitation costs from $15,000 to $35,000.
- Elimination of minimum repair cost threshold.
The department also introduced procedural requirements applicable only to Streamlined (k) – including:
- The availability of Streamlined (k) to pay for lead-based paint stabilization costs above and beyond that paid for by HUD when it sells real estate owned (REO).
- The option (rather than a requirement) for the mortgagee to establish a contingency reserve of rehabilitation loan proceeds.
In addition, like the regular Section 203(k) program, Streamlined (k) is available:
- To augment an FHA Energy Efficient Mortgage (EEM),
- To insure the mortgage on a single-family housing unit sold from the HUD’s REO inventory
- To insure a mortgage that covers both repairs costs and the refinance of an existing mortgage.
