Great news!! HUD has recently updated their guides to allow for a repair escrow up to $10,000.
Each HUD REO will be offered for sale using one of 3 approaches listed
- Insurable: Properties marketed as “insurable” are those that meet FHA’s MPR for existing housing and MPS for new construction at the time of the appraisal in their “as-is” condition without repairs being necessary.
- Insurable with repair escrow: A property that requires no more than $10,000 for repairs to meet FHA’s MPR or MPS as estimated by the PCR and as reviewed and determined to be reasonable by the appraiser, is eligible to be marketed for sale in its “as-is” condition with FHA mortgage insurance under the 203(b) repair escrow program, provided the purchaser(s) establishes a cash escrow to ensure the completion of the required repairs. Purchaser(s) are permitted to include in their mortgage an amount equal to 110% of the estimated cost of the repairs. Note that properties designated insurable with repair escrow $10,000 or less in required repairs, may also be eligible for the 203(k) Streamline program, provided that the repairs qualify as eligible work items. See the FHA 203(k) Program Guidelines for details.
- Uninsurable: Properties offered for sale “uninsured” do not meet, in their “as is” condition, FHA’s MPR or MPS and the cost of repairs identified by the appraiser to meet MPR or MPS are estimated to exceed $10,000. Uninsurable properties qualify only for Section 203(k) financing and, depending on the scope and extent of repairs needed, the Streamlined 203(k) Limited Repair Program. See the FHA 203(k) Program Guidelines for requirements and restrictions.
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