Understanding the FHA 203K STREAMLINE AfterBefore

Dec Program Highlights FHA Renovation Program Simplified process! Up to $35,000 in repairs with no minimum! No consultant required No contingency funds required Up to 50% of materials can be disbursed after closing to each contractor in order to defray cost Two draws per contractor No 10% holdback

Dec Eligible Properties 1-4 unit properties Town houses Condos (interior only) Row homes HUD Repos (single unit only) Purchase and Refi Transactions

Dec Eligible Improvements Repair/Replacement/upgrade of : - roofs, gutters and downspouts - existing HVAC systems - plumbing and electrical systems - flooring Minor remodeling, such as kitchens, which does not involve structural repairs Painting, both exterior and interior Weatherization, including storm windows and doors, insulation, weather stripping, etc. Septic system and/or well repair or replacement Repair/replace/add exterior decks, patios, porches

Dec Other Eligible Improvements Purchase and installation of appliances, including free- standing ranges, refrigerators, washers/dryers, dishwashers and microwave ovens Accessibility improvements for persons with disabilities Lead-based paint stabilization or abatement of lead- based paint hazards Basement finishing and remodeling, which does not involve structural repairs Basement waterproofing Window and door replacements and exterior wall re- siding

Dec Ineligible Improvements Major rehabilitation or major remodeling, such as the relocation of a load-bearing wall New construction (including room additions) Repair of structural damage Repairs requiring detailed drawings or architectural exhibits Landscaping or similar site amenity improvements

Dec Ineligible Improvements Any repair or improvement requiring a work schedule longer than six (6) months Rehabilitation activities that require more than two (2) payments per specialized contractor

Dec Who Can Do the Work? Borrower can select their own contractor –Should be licensed and insured if required by municipality –Should be able to document qualifications Borrower can do their own work only if they can document their qualifications

Dec Getting them Closed Borrower collects contractor bids Bids are used to order appraisal Appraiser will do a “subject-to-completion” appraisal Borrower and contractor sign contract

Dec What Happens After Closing? Work begins Up to 50% can be paid to each contractor up front Final inspection will be done to ensure workmanlike completion of work Title update will be needed before final disbursement

Dec Selling the 203(k) Streamline Much faster process to get to closing Includes appliances and cosmetics Less expensive (no contingency funds, no consultant fee, fewer inspections, etc.) Up to 110% of after-improved value Overcomes borrower concerns about property

Dec Get the message out to those who can build your business with you Realtors General Contractors Dealers Community Groups

Dec  Americans spend $165 billion annually in home renovation  20% of the projects are greater than $5,000  $35 million in eligible rehabilitation projects Don’t Miss an Opportunity!!!

Dec The possibilities and profitability for Renovation Lending are huge!

Dec InformationalResources on Section 203(k)

Dec Q & A What is the minimum repair amount? None What is the maximum repair amount? $35,000 Is a contingency reserve fund required? No How many draws are allowed per contractor? 2

Dec Q & A Can funds be released to the contractor prior to work starting? Yes- up to 50% of material cost What are Ineligible Improvements? Major rehab/remodel New construction Structural damage Anything involving architectural drawings/exhibits What is the 203k Streamline best used for? Minor repairs Appliances Cosmetics

Dec Q & A What is the time frame for completion of the rehab? Max. 6 months Are both Purchase and Refi transactions eligible? Yes Is an FHA Consultant needed? No