It has never been a requirement of today's typical mortgage originator or underwriter to be an expert in the fields of Home Inspection or construction. For the 203(k) program to be successful on a grand scale it becomes necessary that someone be expert in these areas. That is the 203k Consultant. From the time of loan origination the consultant is invaluable to help prevent inadequate plans for improvement from being approved, which could jeopardize the soundness of the mortgage, and during construction to insure compliance. In order to answer these concerns, FHA has included in its underwriting guidelines the following requirements:

1. A Home Inspection that Categorically Examines the Structure While Reviewing 35 Areas of Concern; this process is provided by the 203k Consultant;
2. A Plan Review to Examine the Customer's Bids in Light of a Site Visit and Review of the Home Inspection Report; this process is provided by the 203k Consultant;
3. The Possibility of a Consultant to perform all of the above Functions Including Cost Estimates.

What Is The Consultant's Role?
What Is The Consultant's Role? The consultant is the KEY to the 203(k) program. If the lender had to rely on the homebuyer (or their contractor) to do their own work Write Up and cost estimate, it would take probably 3 to 6 months to get their package acceptable for the lender to proceed to the appraisal stage. As you can imagine, this is too long for the mortgage lender to deal with the property. To cut this time frame down to approximately 2 weeks, the lender will allow the borrower to obtain the services of an independent consultant to prepare the construction exhibits. The 203(K) Consultant was created to address the need for Direct Endorsement Lenders to better control timeframes through the use of an individual who can formulate the work Write-Up by consolidating the functions of a Home Inspection, site visit and the creation of the bid package. We as Consultants, have an extensive construction background with advanced home inspection skills and remodeling experience. It’s our responsibility, as consultants, to complete the home inspection and construction exhibits as soon as possible after you, the borrower, sign the sales contract in order for the lender to request the appraisal of the property. In order to attain this goal, the consultant must be able to prepare the work Write Up and cost estimate without using outsiders to obtain bids from. We, as your consultants, are expert in this function and use cost estimates that are reasonable for the area in which the property is located. After the work Write Up and cost estimate is completed, you will begin the bidding process with the contractors or subcontractors you select for your project.

FHA requires that the consultant who prepares the work Write Up and cost estimate needs to inspect the property to assure:  

• There are no rodents, dry-rot, termites and other infestation on the property;  
• There are no defects that will affect the health and safety of the occupants;  
• The adequacy of the existing structural, heating, plumbing, electrical and roofing systems; and  
• The upgrading of the dwellings thermal protection (where necessary).

The HUD/FHA Home Inspection Report should address any deficiencies that exist and certify the condition of all major systems: electrical; plumbing; heating; roofing and structural. A wood-boring insect report should be included for all loans if required by the lender. It is possible other reports may also be required. For properties with private sewer and water, a septic certification and a private well analysis is required. If we, as your consultant, determine that additional professional expertise is needed to provide all the inspection services required to complete the report, we will make such recommendations at the time of inspection.

The Home Inspection is the cornerstone of a successful FHA 203(k) Mortgage.As a part of the application process for an FHA 203(k) Rehabilitation Mortgage, a home inspection report on the current condition of the property is required. In most cases, the Home Inspection Report will be the Direct Endorsement (DE) Underwriter's only "view" of the property in its as-is condition. HUD is not looking for the consultant to make the house perfect, but only determine if the house needs to be repaired based on the above mentioned items.

It is essential that this inspection be carried out in the utmost professional and competent manner. We, as your consultant, will refrain from making our own personnel opinions about the property, while still maintaining our role as an advisor to you, the borrower and protecting the interests of the lender and HUD.