1. FHA Approval Process UPDATED March 30,2011

2. 2 FHA Approval Options Effective Feb 1, 2010, HUD eliminated FHA “SPOT” condo loans. Lenders will have two condominium project approval processing options. HUD Review and Approval Process (HRAP) Direct Endorsement Lender Review and Approval Process (DELRAP)

3. FHA Review Types DELRAP: –Direct Endorsement Lender Review and Approval Process –Reviewed internally by Wells Fargo Builder Approval Group –2-3 day process HRAP: –HUD Review and Approval Process –Reviewed externally by HUD –4-6 week process

4. HUD Mortgagee Letter Summary No more than 15% of the units can be 30 days delinquent with HOA dues Budget review requires 10% allotment towards reserves No more than 10% of the units within a project may be owned by single entity Right of refusal allowed if in compliance with Fair Housing Act 24 CFR 100 Project consisting of four or more units will have no more than 30 percent of the total units encumbered with FHA insurance

5. Approved FHA Projects Oak Park 59 Approved Forest Park 23 Approved River Forest 4 Approved https://entp.hud.gov/idapp/html/condlook.cfm Search by city NOT by zip code

6. Approved Project Issues Even though a project is listed approved on the Hud website, problems can arise. Does any one person or entity own more than one unit? (can’t be more than 10%) How many units are over 30 days delinquent on their HOA dues? (can’t be more than 15%) Number of units rented? ( can’t be more than 50%) Any of these answered higher than noted, will make the property currently ineligible for FHA financing.

7. FHA DELRAP NEEDS LIST  1. HOA CERTIFICATION FORM – Lenders Form  2. ACTUAL HOA BUDGET & MOST RECENT FINANCIAL STATEMENTS –  3. COPY OF INSURANCE POLICY –  4. RECORDED CONDO/PLAT MAP indicating legal description  5. RECORDED DECLARATIONS and BYLAWS  6. ARTICLES OF INCORPORATION. http://www.ilsos.gov/corporatellc/http://www.ilsos.gov/corporatellc/  7. HOA TAX ID NUMBER _______________  8. MANAGEMENT AGREEMENT If Self-Managed, submit a letter on appropriate letterhead.  9. OUTSTANDING OR PENDING LITIGATION ANALYSIS and/or SPECIAL ASSESSMENTS ANALYSIS, on HOA or Management Letterhead.  10. HOA MEETING MINUTES – Last two HOA Meeting minutes

8. FHA verses CONVENTIONAL FHA Conventional $200,000. Sales Price$ 200,000. Sales Price 3.5% Down5% Down $194,930. Mort. Amt. w/MIP$190,000. Mort. Amt. 30 yr Fixed 4.875%30 yr Fixed 5.25% $ 1031.59 P & I$ 1049.19 P & I $ 178.69 MIP$ 148.83 PMI 50% O/O70% O/O 25% commercial space20% commercial space Min. credit score 600Min. credit score 680 <15% delinquent condo dues 10% minimum yr reserve dep10% minimum yr reserve dep