Popular purchase-rehab loan may re-open for investors

Carol Galante, FHA acting commissioner, told National Mortgage News that the agency is considering re-opening the 203(k) program to investors but a decision has yet to be made.

“It’s still on the table,” Galante said.

Owner-occupants continue to use popular 203(k) loans, which allow the borrower to finance both the purchase of the property and upgrades into one mortgage guaranteed by the government.

For 15 years FHA has maintained a moratorium on allowing investors to use the 203(k) program because of past abuses.

Many small investors are playing a significant role in the current market by turning foreclosed homes into rental properties.