203k - Wells Fargo Purchase and Renovate Rant

I am so frustrated. We are buying a house that needs a lot of work and I was really looking forward to taking advantage of this program. (for those that don't know about it - the bank gives you extra money for renovations and it is rolled into your mortgage).

I have had such a difficult time finding contractors who participate in this program. Then once I did find a few people it takes about a week, week and a half to setup a time to meet for an estimate, then another week, week and a half to hear back about the numbers. And then no one gets back to you with answers about questions about the estimate. I started this process at the end of December and thus far I have only gotten one estimate, and when I asked for more information (10 days ago!), I have heard nothing.

I think that since all the contractors are swamped with Sandy work no one wants to deal with all the hassles that go along with this type of project. I am so disappointed that we won't be able to do this program, but I am already past my initial closing date and I can't risk losing my down payment for this house.

Sorry, just a little rant as I'm having major buyers remorse right now.

Message edited 2/4/2013 3:47:42 PM.

203k - Wells Fargo Purchase and Renovate Rant

When we did our 203k Reno it was a full time job, so I can relate. Your best bet may be to get a contractor on board who is not approved and go through the process of getting him approved. It's really simple, they just have to sign a form and provide proof of insurance.

That's what we did. After he was done, he swore he'd never do another 203k, they are a headache, so maybe if you get someone who doesn't have experience they may be more willing to help.

Also, if I'm not mistaken, Lowes, HD and Sears are all qualified under the program and may be more responsive.

Like I said, I did it three years ago, and if you have any questions, feel free to Fm me!

Re: 203k - Wells Fargo Purchase and Renovate Rant

Thanks for your reply. I just can't believe that I have access to this money that I won't be able to use :(

I am also shocked at how much money they want to charge you under this program. I guess they include extra profit since they have to layout the money and do all that paperwork, but wow - it's kind of insane!

Re: 203k - Wells Fargo Purchase and Renovate Rant

We used a contractor who had never done the program before and became approved. At the end he said he would do it again if it was a big project like the one we did.

I will say that we bent over backwards to get him his money ASAP at every step of the process, so we didn't make it too torturous for him. There were a couple of times he was getting antsy for a payment after he had to lay out money, but he never had to wait too long.

Definitely not easy but worth it in the end.

Re: 203k - Wells Fargo Purchase and Renovate Rant

Sorry you are having a frustrating experience. It sounds like it has been really stressful!

I am in the midst of a transaction now (NOT through Wells, though) where my buyers opted to do a 203(k) loan -- the house is in good condition, but they want to expand it, so they chose to do a 203(k) loan. Because of the scope of the job, they are doing a full-blown 203(k), not the streamlined version.

It's going really smoothly and things are moving along quickly, but they had a contractor selected from the outset, so it was just dealing with getting an estimate from one contractor. I think it would be much more of a logistical nightmare to be shopping around for a contractor after you are in contract, getting multiple estimates.

I actually think you are better off using a contractor who is experienced with 203(k) loans; most lenders who do these types of loans have a list they can provide. Did you ask your loan officer for any recommendations?

In my clients' case, an FHA planner is involved (because it's not a streamline loan), but the specific contractor they chose and FHA planner work together often, so that is making the process easier. And the planner and the loan officer from the bank have been in touch since the process began. So communication is key, and I think there is better communication and coordination where all the key players are well versed in the process and, ideally, have worked together before. (I know that's not always possible, but it's the ideal, imo, and maximizes the chance of success with this type of loan).

Are you sure you have to forego the option of the rehab loan at this point? Was your initial closing date an on or about date? I don't know how extensive your renovations will be, but I am wondering if you are doing a streamlined 203(k) loan, could you use the estimate you have obtained from the contractor, submit it to your lender, and have the loan approved within a reasonable amount of time (within 30 days)? What does your loan officer advise? And your attorney?

Message edited 2/4/2013 10:37:45 PM.

Re: 203k - Wells Fargo Purchase and Renovate Rant

It's very difficult dealing with any kind of work where it is expected that contractors need to lay out money.

I go through this at work. (I work with the disabled and this is how it is to put in e-mods like ramps and handicapped bathrooms). No on wants to do it and it takes forever and everyone is pissed thinking we're not helping them.

Since I'm married to a contractor, I KNOW how hard it is to come up with that money, especially when you think about needing to pay your guys and your own mortgage.

I know this is not what you want to hear but really, it's not the contractors fault. There needs to be a better system.

Especially here on LI where it costs so much to just live and many contractors are small businesses living paycheck to paycheck ;).

I would follow one of the other poster's suggestions and look into a company that is big and can afford to lay out $$ a little bit more, or if possible go the above posters route.

I hope you can come up with a way to make it work. I personally feel like programs that are designed to help, frequently can't because the amount of hoops people need to jump through. It can be much easier to just throw in the towel.

Message edited 2/5/2013 5:40:08 AM.