FHA 203k Consultant

Do I Have To Use A 203k Consultant?

A borrower must use an approved FHA 203k Consultant on all standard 203k loans to prepare the work write-up and coordinate the construction exhibits. Many 203k lenders are also requiring that a 203k consultant be used for streamline 203k loans as well.

In situations where no structural changes are needed, the 203k consultant can work with the borrower to prepare the exhibits themselves. When an 203k consultant is used, HUD does not warrant the competence of the 203k consultant or the quality of the work that the consultant may perform for the borrower. The 203k consultant must enter into a written agreement with the borrower that completely explains what services the consultant will perform for the borrower and the fee charged.

Who Sets The Fees That A FHA 203k Consultant Can Charge?

The fee charged by the consultant can be included in the mortgage. HUD has set the allowable fees and a borrower should pay the same amount for a work write up no matter where they are located in the United States. In addition to the following 203k consulting fee the consultant may also charge a traveling fee if the property is located more then 30 miles from the 203k consultant’s place of business.

FHA 203k Consultant Fee Chart

Repairs: less than $7,500 – $400.00

between $7,501 and $15,000 – $500.00

between $15,001 and $30,000 – $600.00

between $30,001 and $50,000 – $700.00

between $50,001 and $75,000 – $800.00

between $75,001 and $100,000 – $900.00

over $100,000 – $1,000.00

An additional fee of $25 can be charged for each additional unit in the property under the same FHA case number. For this fee, the FHA 203k consultant would inspect the property and provide all the required architectural exhibits. State-licensed architect or engineer fees are not restricted by this fee schedule. The architect and engineer fees must be customary and reasonable for the type of project.)

Should The Borrower Attend The 203k Consultant’s Site Visit?

Prior to the appraisal, the FHA 203k Consultant must visit the site to ensure compliance with program requirements. The utilities should be turned on for this site review to take place. If the home is vacant and the utilities are not on, then a larger contingency reserve may be requested by the lender, in most cases a minimum of 15%.

It is always suggested that the borrower and 203k contractor(s), if already chosen, should attend the walk through with the consultant.

Applying For Approval As A FHA 203k Consultant Roster

To apply for placement on the FHA 203k Consultant Roster, an applicant must submit the information listed below to the HOC in the area in which he/she will be conducting business. See HUD Mortgagee Letter 2000-25 for more information.

The following information should be submitted to HUD for review:

A minimum of three years experience as a remodeling contractor, general contractor or home inspector. A state license as a state certified engineer or architect may be submitted in lieu of documentation of the three years experience;
Licensing (general contractor, home inspector, etc). Proof of license should be included in the package for those states where a state license is required;
A narrative description of the current/prospective consultant’s ability to perform home inspections, prepare architectural drawings, use proper methods of cost estimating and complete draw inspections; and,
The applicant must also submit a certification verifying that the consultant has read and fully understands the requirements of HUD Handbook 4240.4, Rev 2 (203k Handbook) and all related materials in Mortgagee Letter 2000.25.