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News Release 2009-91 | August 6, 2009

New OCC Community Developments Insights Report Focuses on the FHA’s 203(k) Home Rehabilitation Financing Program

WASHINGTON—The Office of the Comptroller of the Currency (OCC) today published a Community Developments Insights report that provides bankers an overview the FHA's 203(k) Home Rehabilitation Mortgage Insurance Program.

"The 203(k) Program is an important tool that can help mitigate a lender's risk, while at the same time restore some of the nation's foreclosed properties and help stabilize neighborhoods," said Comptroller of the Currency John C. Dugan.

"HUD strongly supports OCC's efforts to increase bank participation in the 203(k) Program. With so many bank-owned properties in need of repairs, this program offers a great way for homebuyers to finance both the purchase and rehabilitation of these homes," said David Stevens, Assistant Secretary for Housing/Federal Housing Commissioner at the U.S. Department of Housing and Urban Development.

The 203(k) Program provides FHA mortgage insurance on loans which combine home purchase and rehabilitation financing. Loans to rehabilitate and refinance a borrower's current resident area are also available under the 203(k) Program. The 203(k) Program is a tool for FHA-approved lenders to originate loans for individuals, nonprofits and government development agencies interested in purchasing foreclosed properties in need of repair. Compared to conventional purchase and rehabilitation products, 203(k) loans carry less risk to lenders since these loans are backed by the full faith and credit of the federal government.

The report provides a comprehensive overview of this program for lenders that may be considering expanding their product line with 203(k) loans. The report also outlines how FHA 203(k) loans would be evaluated under the Community Reinvestment Act.

The Insights report can be accessed on the OCC's website at: https://www.occ.gov/topics/community-affairs/publications/insights/insights-fha-203k-loan-program.pdf.

Related Link

  • Community Developments Insights

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