The nation’s aging housing stock and acute supply shortage illustrate the need for effective rehabilitation financing programs. If we could slow obsolescence by 0.1 percent per year, we would “save” 107,000 units per year. The FHA rehabilitation financing program, 203(k), is a well-intentioned and much-needed vehicle to enable this, but very few loans are made because the process is cumbersome. It needs a major overhaul.
In this brief, we have come up with a solution to increase the use of this program. The solution centers on making it more turnkey for the borrower and less complicated for the lender. We also discuss how added risk to contractors can be ameliorated.