FHA 203K Program Done In-House & Done Right!

How Can We Help?: Offer Home Buyers the opportunity to create their own Home Makeover and live in the home they dreamed of. Offer Realtors and Sellers an easy solution to selling properties where repair and remodel funds are not otherwise available. Stimulate the purchase (or refinance) of homes needing cosmetic remodeling by offering a special streamlined way to acquire and improve the home all in one transaction.

How Can We Help? (Continued): Improve the appeal & values of homes in neighborhoods where homes exist that are in need of repair and rehabilitation. Offer a program that can be closed in the timeline typical of other FHA purchases or refinances.

The Top 5 Why’s: Low down payment – Only 3.5% down! Easy Qualifying – FHA flexibility on credit and Debt to Income One loan – Purchase/Refinance & Improvements all-in- one! The Borrower gets “the house they really want” with a simple “My Home Makeover” Assumable – FHA loans are assumable (with qualification) which may offer opportunities in selling in the future.

Program Overview: Minimum Rehabilitation/Repair Costs: $5000 Maximum Rehabilitation/Repair Costs:$30,000 No major remodeling, structural repairs, permit-required work or room additions allowed.

Program Guidelines: LTV/CLTV Purchase OnlyLTVCLTVLTVOCCPROPERTY Owner SFR Rate and TermLTVCLTVLTVOCCPROPERTY Refinance Owner SFR

Loan Limits: Maximum Loan Amounts: Floor:$271,050 Continental USA$417,000 Hawaii$625,500 Note: Maximum loan amounts determined by HUD/FHA guidelines for subject property County. Subordinate liens are not permitted behind new loan. The maximum base loan amount may not exceed the statutory limit for each county/MSA.

Maximum Loan Calculations My Home Makeover 203K – Purchase 96.5% of the lesser of: The sales price or “as-is” appraised value plus borrower- paid repairs or 110% of the “as-completed” appraised value (100% for condo) (subject to Underwriting Approval) Maximum seller paid costs (contribution) is 6%

Maximum Loan Calculations (cont’d) My Home Makeover 203K – Rate & Term FHA Refinance Lower of the following: Sum of existing debt plus rehab costs plus borrower paid closing costs and prepaids plus discount points on total loan amount minus discount points on repair costs minus FHA MIP refund or Multiply the lesser of the following by 97.5% : The “as-is” appraised value plus repair/rehab costs, or 110% of the “as-completed” appraised value (100% for condo) (Subject to Underwriting Approval)

Maximum Loan Calculations (cont’d) My Home Makeover 203K – Rate & Term Refinance If the borrower has owned the property for less than 12 months and the loan is not already FHA insured, the new loan amount is based on 97.75% of the lower of: The “as-is” appraised value or The borrower’s acquisition cost plus debt incurred for rehab since acquisition

Additional Eligibility Requirements: Non-Occupant Co-Borrower is allowed Permanent Resident Alien is allowed Non-Permanent Resident Alien is allowed Foreign National NOT Eligible (some restrictions apply to all above. See program guidelines for details)

Credit Criteria Overview: DO/DU Approve/Eligible determination required Maximum 50% DTI (regardless of AUS) 640 Minimum credit score Co-Borrower with no scores is not permitted Three credit scores (will consider two scores with compensating factors and case-by-case basis) NO Non-traditional credit allowed Too few credit trade-lines not allowed Minimum 12 month mortgage/rent rating required

Seasoning Requirements: Not eligible for FHA Flipping-waiver Loans with resale dates > 90 days up to 12 months may require supplemental documentation and additional appraisal. For any sale where the seller has owned the property from 91 days to 180 days and the new sales price is 100% or higher than the seller acquisition cost, a second appraisal is required to confirm value. Second appraisal cannot be charged to the borrower.

Qualification Overview: Employment and Income requirements - Follow FHA guidelines (subject to Underwriter Approval) Asset requirements – Follow FHA guidelines (subject to Underwriter Approval) Gifts/Down Payments – On purchases, borrower is required to contribute a minimum of 3.5% of the lesser of the purchase price or appraised value (a minimum down payment is not required on refinance) A Gift meeting FHA/HUD policy can be used for the borrower’s total cash investment in the property purchase. Gift MUST come from qualified Family members only.

Qualification Overview (cont’d) Documentation requirements – Follow FHA guidelines (subject to Underwriter Approval) Eligible Properties – SFR only. FHA approved condo projects and PUD (subject to U/W approval as well) No “listed properties” (must be off market at least 1 day) allowed. Appraiser must reflect that property is at least in “average” condition as completed. (utilities must be on)

203K Specific Documentation: Standard FHA Loan Documentation, verifications and disclosures PLUS the following: FHA Rehabilitation Loan Agreement FHA Homeowner/Contractor Agreement FHA Notice to Borrower Regarding Rehabilitation Loan FHA Rehabilitation Escrow Account & Fees Acknowledgement

Final Details: Lock periods:30-45 days 203K Supplemental Origination Fee: The greater of $350 or 1.5% of repair/rehab costs All work and final inspection MUST be completed in within 30 days from close of escrow All transactions MUST have a HUD 203K final compliance inspection No “DIY” self-help allowed MUST use TLC approved contractors and HUD Consultants/Compliance inspectors (Phoenix Metro)

Final Details (Continued) Submit your Contractors and HUD Consultants for TLC approval outside of the Phoenix Metro area. Financed improvements must be between $5000 and $30,000. Final loan amount cannot exceed 110% (including financed UFMIP) of the “as improved” value supported by the FHA appraisal. Contractor will receive two draws, the first at COE (not to exceed 50% of the materials costs without labor or taxes) and the final upon completion of repairs PLUS HUD Compliance Inspection.

Final Details (Continued) No HPML loans – Must run HPML test on all loans prior to issuing initial disclosures. Loans allowed only in states where TLC is licensed or has exemptions Condo projects in Florida not allowed Properties in Texas not eligible for this program 1% Down Payment Gift Program NOT eligible Electronic Signatures NOT allowed on this program For further details, please refer to program guidelines and HUD Handbook.

What’s next? So Go Help Someone Realize Their Dream Of Home- Ownership And A Newly Remodeled Home! Call Your Certified and Licensed My Home Makeover FHA 203K Loan Officer Today! Contact: Jeff Ferm- Sr. Loan Officer Phone: Website: