Leesa Sandoval and Jonathan Blackwell know how valuable the 203K loan is for prospective homeowners—who want a single loan to purchase and renovate their house—and loan originators striving to expand their customer base. While both handle other residential lending business, they refer to themselves as 203k “specialists.”
The two experienced originators explained there has been a steady increase in 203k activity during the last few years. “Last year it accounted for more than 50 percent of my overall production,” said Sandoval, Prime Lending, Dallas.
“The 203k makes up about 80 percent of our business and we’ve been busy since we began specializing in it four years ago,” added Blackwell, Home Town Lenders, Atlanta. “A lot of people have been inquiring about it. I believe the interest in this program will continue for at least the next few years.”
They noted that more homeowners are purchasing properties that need repairs and other renovation, from cosmetic changes to more significant upgrades. “A majority of the 203k volume has been from foreclosure properties,” said Blackwell. “Sometimes the customer has no choice—the repairs are required. However, there are many other borrowers who choose to buy a smaller property and then expand with a second story or master suite.”
“The 203k enables buyers to get their property the way they want it from the beginning, rather than having to make changes at a later date,” said Sandoval.
Reaching Customers
Of course, the key is making sure prospective homeowners are aware of the 203k program. “Many Realtors don’t realize how easy this is to work with,” said Sandoval. “Borrowers often make their purchase without realizing the opportunity to use it to their advantage.”
Sandoval explained that word-of-mouth and her website are the two main ways she markets the 203k. “So far, my greatest success has been on the Internet,” she said. “I’ll get many referrals from past customers and others read about the program on my website (www.203krehabnow.com).” Her site features articles, scenarios, videos and updates for Realtors.
In addition, Sandoval has held some “lunch and learn” presentations for Realtors. “The agents learn how easy this is and get a continuing education credit for attending.”
“Most of my promotion is also through word-of-mouth and the website,” said Blackwell. His site (www.203KLoan.net) includes background information and in-depth analysis of the 203K process as well as articles describing other renovation products like the HomeStyle and HomePath Renovation loans offered by Fannie Mae.
Blackwell has found blogging to be effective as well. “Usually if I get several people ask me the same question about the 203k I will answer it and then include the information on my own blog and in guest blogs on other sites.”
Of course, you can also promote your 203K expertise by writing about the program in newsletter articles, direct mail (postcards and letters) and articles for your local newspaper.
Overcoming Challenges
They stress that a major challenge to handling the 203k is the lack of awareness about the options. “Many Realtors and consumers just don’t know about it,” noted Sandoval.
In addition, some may be wary of the program based on a bad experience in the past. “There have been loan originators inexperienced with the 203k who have mishandled the loan and Realtors may not be anxious to go through the process,” said Blackwell.
Getting Started
Sandoval encourages originators wanting to establish a 203k business to master the guidelines. “You have to take the time to study the program,” she said. “Learn what can be done.”
“Align yourself with someone who knows what they’re doing,” stressed Blackwell. “You can get training from a lender, talk with a HUD consultant and read articles on various websites. I frequently get questions from other originators and am willing to provide information.”
In addition, they both advise being familiar with contractors, consultants and others experienced with the 203k program.
Of course, once you do add the 203k niche, make sure customers are aware of what’s involved. “For example, they need to know upfront that it takes longer to get a 203k loan approved,” said Blackwell.
(Note: Please see other articles about the 203k elsewhere on Broker Banker.)
Article By David Robinson
David Robinson is associate editor of Broker Banker.
Great job on the article David! Thanks for helping us spread the word about the 203K!
Jonathan B