The 203k within the Public Sector

Written By: Bonnie Wilt-Hild

Ok, so as I am sure most of you can imagine, I lay awake at night and think about mortgage programs, more particularly government lending programs because, quite simply put, they are the most useful. Of particular fame in my late evening dreams is the 203k, not just because the complexity of construction rehab intrigues me but also because of the sheer utility of the program overall. In realizing this several years ago as well as the obvious fact that I need a hobby, I have invented several scenarios by which this program could be utilized by industry professionals to generate new revenue in the way of increased originations but also the multiple uses by the public sector to revitalize city neighborhoods nationwide.

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As I mulled through information this week I was pleased to find that at least one government entity, this being the Baltimore City Department of Housing, also share a similar vision. In a press release released by the Mayor’s office, the City of Baltimore introduced the “Vacant to Value” initiative designed to reduce vacant housing and urban blight in Baltimore. The programs intention is to offer certain initiatives to both homebuyers and developers which will hopefully initiate investment and redevelopment in distressed areas of Baltimore City by offering homeownership incentives such as a $5000 forgivable loan for “Good Neighbors” such as Police Officers, Firefighters and the like. When reviewing the program model I was thinking what better complement to incentives such as these than the FHA 203k program. Not only would homeownership be encouraged due to the availability of such incentives but the 203k would allow these borrowers to renovate and rehabilitate properties in these distressed areas in need of significant repair.

Additionally, several state government offer similar incentives to first time homebuyers allowing grant funds and reduced interest rates to potential homebuyers. These programs exist on a national level with CalFHA through California’s Department of Housing and Community Development offering closing cost help to Texas Department of Housing and Community Affairs offering similar incentives for first time or low to moderate income borrowers. Considering the number of available foreclosure sales and declining values nationwide, now is the perfect time for local governments to offer such incentives to revitalize and rehabilitate these neighborhood and communities and the perfect vehicle to partner with these incentives is the 203k or like programs as the Maryland Department of Housing and Community Development discovered for themselves.

The Maryland Mortgage Program (MMP) in partnership with Bank of American recently rolled out an acquisition and rehabilitation program which mirrors guidelines for rehabilitation as administered with the FHA Streamline 203k. With Maryland counties such as Prince George’s being nothing short of ground zero for foreclosure sales, this program allows first time homebuyers to not only purchase properties in the State of Maryland utilizing the grant funds necessary for down payment and payment of closing costs, but also allows potential homebuyers to select from properties that would not normally meet HUD minimum property standards and utilize the departments acquisition and development program as a means to rehabilitate those properties that do not require repairs greater than $35000.00. Having the ability to utilize the standard 203k for properties that required repairs in excess of $35,000 would be icing on the cake.

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In closing I would encourage both private sector agencies and the lending community to reach out one another to establish programs and guidelines that would benefit both in terms of revitalizing city neighborhoods and areas with excessive foreclosure rates. In doing this by utilizing the FHA 203k lenders will find they are able to generate new sources of business where originations are concerned and city and county governments can reduce the number of overall properties owned while revitalizing communities. A step further, I hope to encourage HUD to establish those program guidelines and lift the moratorium on the investor 203k, this would go a long way in allowing investor groups to purchase and renovate properties in a nation where one in every 45 homes received a foreclosure filing in 2010, allowing for further stabilization of the nation’s housing prices. At end, I will say my public service announcement is complete, have a great week and as always, happy underwriting!

About The Author

Bonnie Wilt-Hild - As an NAMP® staff writer, Bonnie currently serves as a senior instructor for FHA Online University ( as well maintains a full-time mortgage underwriting position as the Senior FHA DE Underwriter for a major lending institution. With over 25+ years of senior-level FHA/VA Government underwriting experience, Bonnie is considered the "Queen of FHA Loans". If you're interested in becoming a writer for NAMP®, please email us at:

Opinion-Editorial (Op-Ed) Disclaimer For NAMU® Library Articles: The views and opinions expressed in the NAMU® Library articles are those of the authors and do not necessarily reflect any official NAMU® policy or position. Examples of analysis performed within this article are only examples. They should not be utilized in real-world application as they are based only on very limited and dated open source information. Assumptions made within the analysis are not reflective of the position of NAMU®. Nothing contained in this articles should be considered legal advice.