The Federal Housing Administration, or the FHA, is run by the Department of Housing and Urban Development, or HUD. The FHA is in charge of administering individual and single mortgage insurance programs that are backed by the federal government (HUD). Their main focus is to make homes affordable with reasonable terms and qualifications for single family homes, so that anyone with a decent-paying job, responsible money-saving habits and okay credit (580 or higher) can get a slice of the American dream. The FHA is responsible for getting the property appraised and working with FHA-approved lending institutions to get the buyer approved so that they can purchase a home. The terms for FHA loans differ from conventional ones because they’re insured by the HUD, which is a part of the federal government, and because these loans are insured, less risk can be assumed by the lenders. So, if the loan were to ever go into default status, the lender isn’t caught holding the bag, the government is.
There is a specific kind of loan that is geared to repair and rehabilitate homes in often, economically distressed and neglected housing areas. It’s very instrumental for any community who is looking to revitalize their neighborhoods through offering a plausible and affordable way for people to buy homes in affordable parts of many cities. The lenders that support these specific kind of loans in areas such as this are seen as committed to rebuilding projects and looked upon very favorably by the HUD, or the US government.
There are also housing agencies on a state and local level who partner with lenders specializing in 203K loans with the intention of specifically rehabilitating properties in low-income housing areas. There are sometimes non-profit organizations involved with these projects that are often founded by or run by people who grew up in or have a personal affinity for the area or neighborhoods that they would like to see return to their original glory. Many people feel sentimental about a lot of things in this world and the neighborhoods that they grew up in are no different, especially if they’ve personally seen them deteriorate over the years and then see an opportunity to turn things around. It’s the people in the community who care about the community that are able to make a difference in these cases. Housing and redevelopment trends in many parts of many cities have proven to be very fruitful for those involved; the developers, the lenders, the home buyers and those who still live in the communities.
Lenders will get involved when they see that they can do so without taking unnecessary risks. Contrary to popular belief, some banks do care about communities, but they should never be confused as non-profit agencies who are there to provide charitable resources. Sometimes just having anyone who is willing to lend is all the charity that a neighborhood or development needs in order to get the ball rolling on a serious revitalization project. If you’ve lived anywhere near an urban center, you’ve probably seen a neighborhood undergo a serious turn-around with the help of local and state government agencies to assist borrowers trying to make a difference for themselves and their communities. 203K mortgages are a great way for a lender to prove their commitment in low-income areas of cities to lending, and also fulfill their obligations regarding the Community Reinvestment Act, or the CRA. There are CRA lending programs that are designed to be excellent sources for directing the turn-around in areas where this kind of rebuilding is taking place, and combined with non-profits and local-housing agencies who are taking an interest as well, this is a formidable force capable of creating some major change.
The rules and regulations of the FHA, HUD, CRA and all of the other players involved with making rebuilding and revitalization efforts possible in cities across the nation, are the reason why people are able to start taking pride in their neighborhoods again. This could be a great feeling for someone who is specifically looking to make a difference in their community, and they can do so by helping themselves out in the process by being able to buy an affordable home using a 203K loan. There isn’t anything wrong with a win-win situation and in these kinds of scenarios, everyone wins. The government is able to help those out in need by creating a housing authority that can make a difference, the lenders who are loaning the money to borrowers are insured by the federal government, and families are able to take pride in their homes and their neighborhoods again.