203(k) Investor Program Faces Political Headwinds - 10/13/11

HUD Secretary Shaun Donovan fielded questions on Tuesday, October 11th at the Mortgage Bankers Association annual conference in Chicago.   When asked about the possibilities of extending the 203(k) loan program to investors his reply was mostly “no”, due primarily to the prevailing political climate.

“I'm open to looking at expanding 203(k). I think there are ways to do it safely and avoid some of the changes in the past. The problem is that we would need legislation to do this,” said Mr. Donovan.  “And unfortunately, I don't think it would be something that would move quickly given some of the disagreements we've had in Congress.”

While the 203(k) program hasn’t been available to investors since 1996, many banking  industry leaders see benefits in allowing investors to participate in the rehabilitation program.   Many believe such a move would provide a much needed tool in helping HUD to clear the nearly 150,000 homes owned by Fannie and Freddie.

Donovan later stated that non-legislative alternatives should be explored, but changes to the program seemed unlikely since Congress would be unwilling to pass the needed legislation to change the program.

See full story on Housing Wire.

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