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Feb 14 -- Through this Request for Information (RFI), the Federal Housing Administration (FHA) seeks public input regarding barriers to the use of the FHA 203(k) Rehabilitation Mortgage Insurance Program (203(k) Program) by lenders and consumers. Information provided in response to this RFI will allow FHA to identify barriers that limit the origination of 203(k) insured mortgages and lender participation in the program and consider opportunities to enhance the 203(k) Program to support HUD's goal of increasing the available supply of affordable housing in underserved communities. Comments are requested on or before April 17, 2023.

The Department of Housing and Urban Development (HUD) is committed to the advancement of its mission objectives to facilitate the provision of safe, affordable, and equitable housing for American households and communities. A component of HUD's 2022-2026 Strategic Plan is the integration of “the customer perspective into everything the Department does to make its interactions feel easy, effective, positive, and equitable.” The plan also seeks to “Increase the Supply of Housing” ensuring all households have access to quality, affordable homes, and use any resources available to strengthen the national housing supply and preserve existing housing. Removing barriers to HUD programs and enhancing HUD programs, such as the FHA 203(k) Program, can help support HUD's goal of increasing the available supply of affordable housing in underserved communities.

The 203(k) Program is used to finance the rehabilitation of an existing one-to-four unit structure that will be used primarily for residential purposes. Mortgages insured through the 203(k) Program can be used to rehabilitate an eligible structure and refinance outstanding indebtedness on the structure and the real property on which it is located; purchase and rehabilitate a structure and purchase the real Property on which the structure is located; or rehabilitate the interior space of an eligible Condominium Unit excluding areas that are the responsibility of a Condominium Association.

The 203(k) Program is an important tool for community and neighborhood revitalization and the expansion of homeownership opportunities for owner-occupant homebuyers.

There are two types of 203(k) Rehabilitation Mortgages: Standard 203(k) Mortgage and the Limited 203(k) Mortgage. The Standard 203(k) Mortgage Insurance Program may be used for remodeling and major repairs, has a minimum repair cost of $5,000, and requires the use of a 203(k) Consultant. The Limited 203(k) Mortgage Insurance Program is used for minor remodeling and non-structural repairs, has a maximum repair cost of $35,000, except for properties located in Qualified Opportunity Zones (QOZs) where the maximum repair cost is $50,000, and does not require the use of a 203(k) Consultant.

A 203(k) Mortgage may also be used in conjunction with any of FHA's energy efficient programs including the Energy Efficient Mortgages (EEM), Weatherization, and Solar and Wind Technologies programs to finance the costs of energy efficient improvements to an existing Property at the time of purchase or refinance, or to upgrade such energy efficient improvements to exceed the established residential building code for New Construction.

The purpose of this RFI is to solicit information regarding barriers to the origination of mortgages under the FHA 203(k) Program and to obtain feedback on ways FHA could improve its policies and programs to expand the preservation, renovation, and expansion of housing through its rehabilitation mortgage programs and policies.

HUD welcomes all comments relevant to expanding the 203(k) Program. HUD is particularly interested in receiving input from interested parties on the questions below. . . .

FRN: https://www.federalregister.gov/d/2023-03089
News release: https://www.hud.gov/press/press_releases_media_advisories/hud_no_23_034

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