1. Purchase Loans 1 8/4/2009

2. 2 Purchase Loans Minimum Cash Investment Under HERA, minimum cash investment = 3.5% of lesser of sales price or appraised value. Under HERA, minimum cash investment = 3.5% of lesser of sales price or appraised value. Minimum cash investment is down payment only. http://www.fhaoutreach.gov/FHAHandbook/prod/inf omap.asp?address=4155-1.2.A.2.c Minimum cash investment is down payment only. http://www.fhaoutreach.gov/FHAHandbook/prod/inf omap.asp?address=4155-1.2.A.2.c http://www.fhaoutreach.gov/FHAHandbook/prod/inf omap.asp?address=4155-1.2.A.2.c http://www.fhaoutreach.gov/FHAHandbook/prod/inf omap.asp?address=4155-1.2.A.2.c Neither closing costs nor prepaids paid by borrower count towards 3.5% minimum cash investment. http://www.fhaoutreach.gov/FHAHandbook/prod/inf omap.asp?address=4155-1.2.A.2.d Neither closing costs nor prepaids paid by borrower count towards 3.5% minimum cash investment. http://www.fhaoutreach.gov/FHAHandbook/prod/inf omap.asp?address=4155-1.2.A.2.d http://www.fhaoutreach.gov/FHAHandbook/prod/inf omap.asp?address=4155-1.2.A.2.d http://www.fhaoutreach.gov/FHAHandbook/prod/inf omap.asp?address=4155-1.2.A.2.d 8/4/2009

3. Purchase Loans So what does that mean to you and your borrowers? 3 8/4/2009

4. Purchase Loans Minimum Cash Investment Prior to 01/01/09, 3.0% x $120,000 = $3,600. $3,600. Since 01/01/09, 3.5% x $120,000 = $4,200. $4,200. So the difference is only $600, right? 4 8/4/2009

5. 5 Purchase Loans Calculating Maximum Mortgage Assume county maximum mortgage limit of $271,050. Assume county maximum mortgage limit of $271,050. Assume $120,000 sales price. Assume $120,000 sales price. Assume $125,000 value. Assume $125,000 value. Assume $1,500 in closing costs and $1,500 in prepaids. Assume $1,500 in closing costs and $1,500 in prepaids. Assume no seller concessions. Assume no seller concessions. 8/4/2009

6. 6 Purchase Loans Calculating Maximum Mortgage Pre-1/1/091/1/09 Sales Price/Value $120,000 $120,000 x.9775 x.9650 x.9775 x.9650 Maximum Mortgage $117,300 $115,800 8/4/2009

7. 7 Purchase Loans Pre-1/1/091/1/09 Sale Price$120,000 $120,000 Sale Price$120,000 $120,000 + Closing Cost 1,500 1,500 Acquisition Cost$121,500 $121,500 Acquisition Cost$121,500 $121,500 - Maximum Mortgage - 117,300 -115,800 - Maximum Mortgage - 117,300 -115,800 $ 4,200 $ 5,700 + Prepaids$ 1,500 $ 1,500 Total Cash Required$ 5,700 $ 7,200 Total Cash Required$ 5,700 $ 7,200 8/4/2009

8. Purchase Loans Remember… There is no minimum cash investment requirement on refinance loans. It applies only to purchases. There is no minimum cash investment requirement on refinance loans. It applies only to purchases. On REO properties being financed with FHA mortgage insurance, special financing provisions may apply, such as $100 down. Where these provisions are offered, they supersede the 3.5% minimum cash investment requirement. On REO properties being financed with FHA mortgage insurance, special financing provisions may apply, such as $100 down. Where these provisions are offered, they supersede the 3.5% minimum cash investment requirement. 8 8/4/2009

9. 9 Purchase Loans Seller Contributions Seller (or other “interested party”) may contribute up to 6% of sales price toward borrower’s closing costs and prepaids. Seller (or other “interested party”) may contribute up to 6% of sales price toward borrower’s closing costs and prepaids. http://www.fhaoutreach.gov/FHAHandbook/prod/info map.asp?address=4155-1.2.A.3.b http://www.fhaoutreach.gov/FHAHandbook/prod/info map.asp?address=4155-1.2.A.3.b http://www.fhaoutreach.gov/FHAHandbook/prod/info map.asp?address=4155-1.2.A.3.b http://www.fhaoutreach.gov/FHAHandbook/prod/info map.asp?address=4155-1.2.A.3.b But … But … 8/4/2009

10. Purchase Loans Not to the borrowers 3.5% minimum cash investment. Sellers, builders, realtors, lenders or entities associated with them may provide neither gifts nor loans, neither directly nor indirectly. Sellers, builders, realtors, lenders or entities associated with them may provide neither gifts nor loans, neither directly nor indirectly. http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.5.B.4.c http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.5.B.4.c http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.5.B.4.c http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.5.B.4.c http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.5.B.7.b http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.5.B.7.b http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.5.B.7.b http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.5.B.7.b 8/4/2009 10

11. 11 Purchase Loans Acceptable Sources of Borrower’s Cash Investment Borrower’s own savings Borrower’s own savings A gift from a relative, employer, union or qualified non-profit. A gift from a relative, employer, union or qualified non-profit. Secondary financing or collateralized loans from government agencies or qualified non-profits. Secondary financing or collateralized loans from government agencies or qualified non-profits. http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.5.B.1.b http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.5.B.1.b http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.5.B.1.b http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.5.B.1.b 8/4/2009

12. Purchase Loans Who’s missing from this list of sources? 12 8/4/2009

13. Purchase Loans And many other seller-funded non-profits 13 8/4/2009

14. 14 Purchase Loans Unacceptable Source of Borrower’s Cash Investment In no case shall the funds required…consist, in whole or in part, of funds provided by any of the following parties before, during, or after closing of the property sale: (i) The seller or any other person or entity that financially benefits from the transaction. (ii) Any third party or entity that is reimbursed, directly or indirectly, by any of the parties described in clause (i). 8/4/2009

15. Purchase Loans Unacceptable Sources of Borrower’s Cash Investment HERA goes on to say that This subparagraph shall apply only to mortgages for which the mortgagee has issued credit approval for the borrower on or after October 1, 2008. 8/4/2009 15

16. Using the $8,000 Tax Credit ML 09-15. http://www.hud.gov/offices/adm/hudclips/letters/m ortgagee/index.cfm ML 09-15. http://www.hud.gov/offices/adm/hudclips/letters/m ortgagee/index.cfm http://www.hud.gov/offices/adm/hudclips/letters/m ortgagee/index.cfm http://www.hud.gov/offices/adm/hudclips/letters/m ortgagee/index.cfm Provides policy guidance on using the tax credit with FHA purchase loans. Provides policy guidance on using the tax credit with FHA purchase loans. Information on the tax credit itself is available at http://www.irs.gov/newsroom/article/0,,id=204671,0 0.html?portlet7 Information on the tax credit itself is available at http://www.irs.gov/newsroom/article/0,,id=204671,0 0.html?portlet7 http://www.irs.gov/newsroom/article/0,,id=204671,0 0.html?portlet7 http://www.irs.gov/newsroom/article/0,,id=204671,0 0.html?portlet7 8/4/2009 16

17. Using the $8,000 Tax Credit Government agencies and non-profit instrumentalities of government can offer tax credit advances secured by a 2 nd lien on the property. Government agencies and non-profit instrumentalities of government can offer tax credit advances secured by a 2 nd lien on the property. FHA-approved lenders, FHA-approved non- profits, government agencies and non-profit instrumentalities of government can purchase the tax credit anticipated by the borrower. FHA-approved lenders, FHA-approved non- profits, government agencies and non-profit instrumentalities of government can purchase the tax credit anticipated by the borrower. 8/4/2009 17

18. Using the $8,000 Tax Credit If the entity purchasing the tax credit benefits from the loan transaction, either directly or indirectly through another party, the proceeds may not be used for the borrower’s down payment. If the entity purchasing the tax credit benefits from the loan transaction, either directly or indirectly through another party, the proceeds may not be used for the borrower’s down payment. Such proceeds may be used for additional downpayment beyond the 3.5% or for closing costs and prepaids. Such proceeds may be used for additional downpayment beyond the 3.5% or for closing costs and prepaids. 8/4/2009 18

19. Using the $8,000 Tax Credit An entity financially benefitting from the transaction includes the FHA-approved lender and the seller. An entity financially benefitting from the transaction includes the FHA-approved lender and the seller. The seller could not, for example, advance funds to a non-profit to purchase the tax credit from the borrower to provide the 3.5% minimum cash investment. The seller could not, for example, advance funds to a non-profit to purchase the tax credit from the borrower to provide the 3.5% minimum cash investment. 8/4/2009 19

20. Using the $8,000 Tax Credit Tax Credit Advances Tax credit advance may not result in cash back to the borrower. Tax credit advance may not result in cash back to the borrower. 2 nd lien may not exceed sum of down payment, closing costs and prepaids. 2 nd lien may not exceed sum of down payment, closing costs and prepaids. May or may not involve monthly payments. May or may not involve monthly payments. 8/4/2009 20

21. Using the $8,000 Tax Credit Purchasing the Tax Credit Proceeds of tax credit purchase may not exceed anticipated tax credit due. Proceeds of tax credit purchase may not exceed anticipated tax credit due. Tax credit purchase fees should not exceed 2.5% of anticipated credit. Tax credit purchase fees should not exceed 2.5% of anticipated credit. Borrower must certify that tax credit will not be subject to any offsets. Borrower must certify that tax credit will not be subject to any offsets. 8/4/2009 21

22. Using the $8,000 Tax Credit Purchasing the Tax Credit Name and EIN of entity purchasing tax credit, credit amount, and fee paid must be entered in FHA Connection Name and EIN of entity purchasing tax credit, credit amount, and fee paid must be entered in FHA Connection Documentation supporting data entered must be included in case file. Documentation supporting data entered must be included in case file. 8/4/2009 22

23. Using the $8,000 Tax Credit 8/4/2009 23

24. Insured Loans on HUD REOs ML 00-27. http://www.hud.gov/offices/adm/hudclips/letters/m ortgagee/2000ml.cfm ML 00-27. http://www.hud.gov/offices/adm/hudclips/letters/m ortgagee/2000ml.cfm http://www.hud.gov/offices/adm/hudclips/letters/m ortgagee/2000ml.cfm http://www.hud.gov/offices/adm/hudclips/letters/m ortgagee/2000ml.cfm Provides basic instructions for processing applications for FHA-insured financing to purchase HUD REO properties. Provides basic instructions for processing applications for FHA-insured financing to purchase HUD REO properties. Additional information available at site of HUD’s contractor at http://www.nhmsi.com/ Additional information available at site of HUD’s contractor at http://www.nhmsi.com/http://www.nhmsi.com/ 24 8/4/2009

25. Insured Loans on HUD REOs 8/4/2009 25

26. Insured Loans on HUD REOs Current Sales Incentives Most properties offered for sale with FHA financing available permit a down payment of $100. Most properties offered for sale with FHA financing available permit a down payment of $100. $2,500 credit will be provided at settlement on all properties with a sales price > $25,000. $2,500 credit will be provided at settlement on all properties with a sales price > $25,000. Borrower may request that FHA pay closing costs not to exceed 3% of sales price. Borrower may request that FHA pay closing costs not to exceed 3% of sales price. 8/4/2009 26

27. Insured Loans on HUD REOs HUD REO Sales Contract, Form HUD-9548 Must be signed by a representative of MCB. Must be signed by a representative of MCB. Have the box on line 4 checked indicating that borrower is applying for FHA financing. Have the box on line 4 checked indicating that borrower is applying for FHA financing. Down payment amount on Line 4 may be left blank unless borrower is applying under $100 down program. Down payment amount on Line 4 may be left blank unless borrower is applying under $100 down program. 8/4/2009 27

28. Insured Loans on HUD REOs HUD REO Sales Contract, Form HUD-9548 If borrower is requesting that HUD pay closing costs, that amount must be stated on Line 5 of sales contract. If borrower is requesting that HUD pay closing costs, that amount must be stated on Line 5 of sales contract. $2,500 credit will be provided automatically; it need not be listed on sales contract. $2,500 credit will be provided automatically; it need not be listed on sales contract. $2,500 is in addition to any amount identified on Line 5. $2,500 is in addition to any amount identified on Line 5. 8/4/2009 28

29. Insured Loans on HUD REOs Case Numbers Lender must obtain new case number. Lender must obtain new case number. Select HUD REO for Processing Type. Select HUD REO for Processing Type. When prompted, enter former FHA case number (from sales contract). When prompted, enter former FHA case number (from sales contract). Appraisal assignment field will not allow entry. Appraisal assignment field will not allow entry. 8/4/2009 29

30. Insured Loans on HUD REOs Down Payment If sales contract specifies $100 for down payment amount on Line 4, loan may be processed on that basis. If sales contract specifies $100 for down payment amount on Line 4, loan may be processed on that basis. If Line 4 is blank for down payment amount, process under standard procedures (down payment = 3.5% of lesser of value or sales price). If Line 4 is blank for down payment amount, process under standard procedures (down payment = 3.5% of lesser of value or sales price). See ML 00-27 for instructions on sales discounts. See ML 00-27 for instructions on sales discounts. 8/4/2009 30

31. Insured Loans on HUD REOs Appraisals Do not order a new appraisal. Do not order a new appraisal. Appraisal prepared for MCB must be used to calculated maximum mortgage. Appraisal prepared for MCB must be used to calculated maximum mortgage. To obtain a copy of appraisal, send an e-mail to MCB. To obtain a copy of appraisal, send an e-mail to MCB. Send request under lender’s corporate e-mail account and include full contact information. Send request under lender’s corporate e-mail account and include full contact information. 8/4/2009 31

32. Insured Loans on HUD REOs Appraisals A new appraisal may be ordered only where: As-repaired appraisal is required for a 203k; or As-repaired appraisal is required for a 203k; or The M&M’s appraisal was more than 6 months old at the time the sales contract was signed; or The M&M’s appraisal was more than 6 months old at the time the sales contract was signed; or Property is being sold with $100 down and sales price exceeds value. Submit appraisal to MCB who will advise if higher value may be used. Property is being sold with $100 down and sales price exceeds value. Submit appraisal to MCB who will advise if higher value may be used. 32 8/4/2009

33. Insured Loans on HUD REOs Lead-Based Paint If property built between 1950 and 1978 and borrower is applying for FHA financing under Section 203(b), lead-based paint inspection must be performed at no cost to borrower. If property built between 1950 and 1978 and borrower is applying for FHA financing under Section 203(b), lead-based paint inspection must be performed at no cost to borrower. Allow two weeks after sales contract is signed for completion of inspection. Allow two weeks after sales contract is signed for completion of inspection. 8/4/2009 33

34. Insured Loans on HUD REOs Lead-Based Paint If property built before 1960 and paint requires stabilization, MCB will effect repairs, probably delaying settlement. If property built before 1960 and paint requires stabilization, MCB will effect repairs, probably delaying settlement. Upon completion, borrower will receive a Clearance Certificate. Upon completion, borrower will receive a Clearance Certificate. If borrower applying for 203(k) financing, work write-up must include lead-based paint repairs. If borrower applying for 203(k) financing, work write-up must include lead-based paint repairs. 8/4/2009 34

35. Insured Loans on HUD REOs HUD REO Properties HUD REO Properties Underwriter must underwrite an REO appraisal just as he or she does a regular appraisal. Underwriter must underwrite an REO appraisal just as he or she does a regular appraisal. Make best effort to ensure that REO property meets MPR. Make best effort to ensure that REO property meets MPR. Discuss repair issues with HUD’s M&M contractor. Discuss repair issues with HUD’s M&M contractor. 8/4/2009 35

36. Refinance Loans Refinance loans are a little different. 36 8/4/2009

37. 37 Refinance Loans FHA offers refinances of both FHA and non- FHA loans. FHA offers refinances of both FHA and non- FHA loans. FHA offers both cash-out and rate and term refinances. FHA offers both cash-out and rate and term refinances. For existing FHA loans, a special non-credit qualifying refinance option is available. For existing FHA loans, a special non-credit qualifying refinance option is available. Mortgage calculation worksheets available at http://www.hud.gov/offices/hsg/sfh/trn/training.cfm Mortgage calculation worksheets available at http://www.hud.gov/offices/hsg/sfh/trn/training.cfm http://www.hud.gov/offices/hsg/sfh/trn/training.cfm 8/4/2009

38. 38 Rate and Term Refinances Any non-FHA or FHA loan can be refinanced. Any non-FHA or FHA loan can be refinanced. A borrower is eligible to refinance the loan, as long as he/she has legal title, even if he/she is not originally on the loan. http://www.fhaoutreach.gov/FHAHandbook/p rod/infomap.asp?address=4155-1.3.A.1.a A borrower is eligible to refinance the loan, as long as he/she has legal title, even if he/she is not originally on the loan. http://www.fhaoutreach.gov/FHAHandbook/p rod/infomap.asp?address=4155-1.3.A.1.a http://www.fhaoutreach.gov/FHAHandbook/p rod/infomap.asp?address=4155-1.3.A.1.a http://www.fhaoutreach.gov/FHAHandbook/p rod/infomap.asp?address=4155-1.3.A.1.a Cash back at closing may not exceed $500. http://www.fhaoutreach.gov/FHAHandbook/prod/inf omap.asp?address=4155-1.3.B.1.b Cash back at closing may not exceed $500. http://www.fhaoutreach.gov/FHAHandbook/prod/inf omap.asp?address=4155-1.3.B.1.b http://www.fhaoutreach.gov/FHAHandbook/prod/inf omap.asp?address=4155-1.3.B.1.b http://www.fhaoutreach.gov/FHAHandbook/prod/inf omap.asp?address=4155-1.3.B.1.b 8/4/2009

39. Rate and Term Refinances Full credit-qualifying. Full credit-qualifying. Loan must be current for the month due. Loan must be current for the month due. Full appraisal. Required repairs must be completed before closing. http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.3.B.1.a Full appraisal. Required repairs must be completed before closing. http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.3.B.1.a http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.3.B.1.a http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.3.B.1.a 8/4/2009 39

40. Rate and Term Refinances No seasoning requirement for senior lien being refinanced. No seasoning requirement for senior lien being refinanced. For non-FHA loans where property was purchased within the last 12 months, mortgage amount based on lesser of appraised value or sales price. http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.3.B.1.e For non-FHA loans where property was purchased within the last 12 months, mortgage amount based on lesser of appraised value or sales price. http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.3.B.1.e http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.3.B.1.e http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.3.B.1.e 8/4/2009 40

41. Rate and Term Refinances Subordinate liens, including lines of credit, regardless of when taken, may remain outstanding (but subordinate to the FHA- insured mortgage. Subordinate liens, including lines of credit, regardless of when taken, may remain outstanding (but subordinate to the FHA- insured mortgage. New subordinate liens may be placed behind the FHA-insured mortgage and are subject to no CLTV cap. New subordinate liens may be placed behind the FHA-insured mortgage and are subject to no CLTV cap. http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.3.B.1.c http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.3.B.1.c http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.3.B.1.c http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.3.B.1.c 41 8/4/2009

42. Rate and Term Refinances Mortgage amount not including UFMIP may not exceed Applicable county maximum. Applicable county maximum. Lesser of -97.75% of appraised value, or… -the sum of the following: Lesser of -97.75% of appraised value, or… -the sum of the following: 42 8/4/2009

43. Rate and Term Refinances Can be included in new mortgage. http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.3.B.1.b http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.3.B.1.b http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.3.B.1.b http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.3.B.1.b Existing first lien Existing first lien Purchase money second mortgage Purchase money second mortgage Junior liens over 12 months old Junior liens over 12 months old Closing costs and prepaid expenses Closing costs and prepaid expenses Discount points Discount points 43 8/4/2009

44. Rate and Term Refinances Can be included in new mortgage. Borrower paid repairs required by the appraisal. Borrower paid repairs required by the appraisal. Interest charged by the servicing lender when the payoff will not likely be received on the first day of the month. Interest charged by the servicing lender when the payoff will not likely be received on the first day of the month. Prepayment penalties. Prepayment penalties. Accrued late charges and escrow shortages. Accrued late charges and escrow shortages. 44 8/4/2009

45. Rate and Term Refinances Cannot be included in new mortgage. Any portion of the funds of an equity line of credit in excess of $1,000 that was advanced within the past 12 months that was for purposes other than repairs and rehabilitation of the property. Any portion of the funds of an equity line of credit in excess of $1,000 that was advanced within the past 12 months that was for purposes other than repairs and rehabilitation of the property. 45 8/4/2009

46. Rate and Term Refinances Prepaid expenses may include… Per diem interest to the end of the month on the new loan. Per diem interest to the end of the month on the new loan. Hazard insurance premium deposits. Hazard insurance premium deposits. Monthly mortgage insurance premiums. Monthly mortgage insurance premiums. Any real estate tax deposits needed to establish the escrow account. Any real estate tax deposits needed to establish the escrow account. 46 8/4/2009

47. Rate and Term Refinances Calculating Maximum Mortgage Assume county maximum mortgage limit of $271,050. Assume county maximum mortgage limit of $271,050. Assume $125,000 value. Assume $125,000 value. Assume $100,000 1 st lien and $20,000 2 nd lien Assume $100,000 1 st lien and $20,000 2 nd lien Assume $2,000 in closing costs and $2,000 in prepaids. Assume $2,000 in closing costs and $2,000 in prepaids. 47 8/4/2009

48. Rate and Term Refinances Calculating Maximum Mortgage Appraised Value $125,000 x. 9775 x. 9775 Maximum Mortgage $122,187 48 8/4/2009

49. Rate and Term Refinances Calculating Maximum Mortgage 1st Lien Payoff$ 99,000 2nd Lien Payoff 19,000 Closing Costs 2,000 Pre-Paids 2,000 Total$122,000 49 8/4/2009

50. Rate and Term Refinances Insured Mortgage Amount Maximum Mortgage$122,000 + UFMIP (1.75%) 2,135 Insured Mortgage$124,135 LTV 99.31% 50 8/4/2009

51. Rate and Term Refinances Documentation Credit report should clearly indicate that loan was current at the time it was refinanced. If not, lender should provide other documentation that loan was current. Credit report should clearly indicate that loan was current at the time it was refinanced. If not, lender should provide other documentation that loan was current. Recommended that case file include payoff statement from any liens being refinanced. Recommended that case file include payoff statement from any liens being refinanced. 51 8/4/2009

52. Cash-Out Refinances ML 05-43. Increased maximum LTV on cash- out refinances to 95%. ML 05-43. Increased maximum LTV on cash- out refinances to 95%. ML 08-09. Restricted 95% cash-out refinances to maximum mortgage of $417,000 effective 04/01/08. ML 08-09. Restricted 95% cash-out refinances to maximum mortgage of $417,000 effective 04/01/08. ML 08-40. Second appraisal required for cash- out refinances where LTV exceeds 85% effective 01/01/09. ML 08-40. Second appraisal required for cash- out refinances where LTV exceeds 85% effective 01/01/09. 8/4/2009 52

53. Cash-Out Refinances ML 09-08. LTV limited to 85% effective 04/01/09. ML 09-08. LTV limited to 85% effective 04/01/09. http://www.hud.gov/offices/adm/hudclips/lett ers/mortgagee/index.cfm http://www.hud.gov/offices/adm/hudclips/lett ers/mortgagee/index.cfm http://www.hud.gov/offices/adm/hudclips/lett ers/mortgagee/index.cfm http://www.hud.gov/offices/adm/hudclips/lett ers/mortgagee/index.cfm Incorporated into 4155.1. Incorporated into 4155.1. 8/4/2009 53

54. 54 Cash-Out Refinances Properties owned free and clear are eligible. http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.3.B.2.a Properties owned free and clear are eligible. http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.3.B.2.a http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.3.B.2.a http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.3.B.2.a Must be current for the month due. http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.3.B.2.b Must be current for the month due. http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.3.B.2.b http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.3.B.2.b http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.3.B.2.b Non-occupying co-borrower may not be added. http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.3.B.2.c Non-occupying co-borrower may not be added. http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.3.B.2.c http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.3.B.2.c http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.3.B.2.c 8/4/2009

55. Cash-Out Refinances Full credit-qualifying. Full appraisal. Full credit-qualifying. Full appraisal. If located in declining area and mortgage exceeds $417,000, second appraisal required. If located in declining area and mortgage exceeds $417,000, second appraisal required. If property purchased within the last 12 months, maximum mortgage based on 85% of the lesser of appraised value or sales price If property purchased within the last 12 months, maximum mortgage based on 85% of the lesser of appraised value or sales price http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.3.B.2.f http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.3.B.2.f http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.3.B.2.f http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.3.B.2.f 8/4/2009 55

56. 56 Cash-Out Refinances New secondary financing may be added, but CLTV for 1 st mortgage and new subordinate financing limited to 85%. New secondary financing may be added, but CLTV for 1 st mortgage and new subordinate financing limited to 85%. No CLTV restrictions on existing secondary financing. No CLTV restrictions on existing secondary financing. Modified 2nds not considered new 2nds. Modified 2nds not considered new 2nds. http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.3.B.2.e http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.3.B.2.e http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.3.B.2.e http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.3.B.2.e 8/4/2009

57. FHA to FHA Streamline Refinances For existing FHA loans only. For existing FHA loans only. Non-credit-qualifying. http://www.fhaoutreach.gov/FHAHandbook/ prod/infomap.asp?address=4155-1.6.C.1.g Non-credit-qualifying. http://www.fhaoutreach.gov/FHAHandbook/ prod/infomap.asp?address=4155-1.6.C.1.g http://www.fhaoutreach.gov/FHAHandbook/ prod/infomap.asp?address=4155-1.6.C.1.g http://www.fhaoutreach.gov/FHAHandbook/ prod/infomap.asp?address=4155-1.6.C.1.g Should reduce monthly principal and interest payment. Cash back to the borrower at closing may not exceed $500. http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.6.C.1.a Should reduce monthly principal and interest payment. Cash back to the borrower at closing may not exceed $500. http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.6.C.1.a http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.6.C.1.a http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.6.C.1.a 57 8/4/2009

58. FHA to FHA Streamline Refinances Exceptions To Reduced Monthly Payment Refinancing to shorter term where monthly payment does increase by more than 20% http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.6.C.4.b Refinancing to shorter term where monthly payment does increase by more than 20% http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.6.C.4.b http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.6.C.4.b http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.6.C.4.b ARM to fixed rate where monthly payment does increase by more than 20% http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.6.C.4.e ARM to fixed rate where monthly payment does increase by more than 20% http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.6.C.4.e http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.6.C.4.e http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.6.C.4.e 8/4/2009 58

59. FHA to FHA Streamline Refinances Mortgage must be current for the month due. http://www.fhaoutreach.gov/FHAHandbook/ prod/infomap.asp?address=4155-1.6.C.4.c Mortgage must be current for the month due. http://www.fhaoutreach.gov/FHAHandbook/ prod/infomap.asp?address=4155-1.6.C.4.c http://www.fhaoutreach.gov/FHAHandbook/ prod/infomap.asp?address=4155-1.6.C.4.c http://www.fhaoutreach.gov/FHAHandbook/ prod/infomap.asp?address=4155-1.6.C.4.c No new subordinate financing. Existing subordinate financing may remain in place. No limits on CLTV. http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.6.C.3 No new subordinate financing. Existing subordinate financing may remain in place. No limits on CLTV. http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.6.C.3 http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.6.C.3 http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.6.C.3 8/4/2009 59

60. FHA to FHA Streamline Refinances Scoring through TOTAL is not recommended. If scored, file must contain documentation for data entered in TOTAL. ML 04-44. Scoring through TOTAL is not recommended. If scored, file must contain documentation for data entered in TOTAL. ML 04-44. If appraisal performed, underwriter may waive repair requirements except for lead-based paint. Lender may, at its option, require that repairs be completed. http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.6.C.1.c If appraisal performed, underwriter may waive repair requirements except for lead-based paint. Lender may, at its option, require that repairs be completed. http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.6.C.1.c http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.6.C.1.c http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.6.C.1.c 8/4/2009 60

61. 61 FHA to FHA Streamline Refinances Maximum Mortgage Amount on Streamlines With Appraisal Lesser of principal balance, accrued interest, fees, charges and escrows or 97.75% of appraised value. Lesser of principal balance, accrued interest, fees, charges and escrows or 97.75% of appraised value. http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.3.C.3.a http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.3.C.3.a http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.3.C.3.a http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.3.C.3.a 8/4/2009

62. FHA to FHA Streamline Refinances Maximum Mortgage Amount on Streamlines Without Appraisal Lesser of principal balance, accrued interest, fees, charges and escrows or original insured mortgage amount. Lesser of principal balance, accrued interest, fees, charges and escrows or original insured mortgage amount. http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.3.C.2.c http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.3.C.2.c http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.3.C.2.c http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.3.C.2.c 8/4/2009 62

63. FHA to FHA Streamline Refinances Maximum Terms Streamline With Appraisal 30 years. Streamline With Appraisal 30 years. Streamline Without Appraisal Lesser of 30 years or remaining term of existing loan plus 12 years. http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.3.C.2.b Streamline Without Appraisal Lesser of 30 years or remaining term of existing loan plus 12 years. http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.3.C.2.b http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.3.C.2.b http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.3.C.2.b 8/4/2009 63

64. FHA to FHA Streamline Refinances Maximum Mortgage On A Streamline Without Appraisal Original Insured Loan Amount (inc. financed UFMIP) of $100,000 @ 6.5%. Original Insured Loan Amount (inc. financed UFMIP) of $100,000 @ 6.5%. Monthly P&I payment = $632.00 Monthly P&I payment = $632.00 Principal Balance$98,500. Principal Balance$98,500. Current interest rate 5.5%. Current interest rate 5.5%. 8/4/2009 64

65. FHA to FHA Streamline Refinances Principal Balance$ 98,500 Principal Balance$ 98,500 Closing Costs + 1,500 Closing Costs + 1,500 Prepaids + 1,000 Prepaids + 1,000$101,000 UFMIP Credit - 1,100 UFMIP Credit - 1,100 Mortgage Amount$ 99,900 Mortgage Amount$ 99,900 (not inc. UFMIP) (not inc. UFMIP) 8/4/2009 65

66. FHA to FHA Streamline Refinances FHA to FHA Streamline Refinances Mortgage Not Including UFMIP$ 99,900 UFMIP (1.5%) + 1,498 Insured Loan Amount$101,398 Monthly P&I @ 5.5% = $575.94. 8/4/2009 66

67. Hope for Homeowners H4HH4HH4HH4H 67 8/4/2009

68. Hope for Homeowners Authorized by Housing and Economic Recovery Act of 2008 (HERA). Authorized by Housing and Economic Recovery Act of 2008 (HERA). Modified by Emergency Economic Stabilization Act of 2008 (EESA). Modified by Emergency Economic Stabilization Act of 2008 (EESA). Modified by Helping Families Save Their Homes Act of 2009. Modified by Helping Families Save Their Homes Act of 2009. ML 08-29, ML 09-03. Program effective 10/01/08. ML 08-29, ML 09-03. Program effective 10/01/08. 68 8/4/2009

69. 69 Hope for Homeowners Eligibility Any type of loan originated on or before January 1, 2008 is eligible, FHA or non-FHA. Any type of loan originated on or before January 1, 2008 is eligible, FHA or non-FHA. Existing loan may be current, delinquent, or in foreclosure. Existing loan may be current, delinquent, or in foreclosure. Owner occupants only. No second homes, no investment properties. Owner occupants only. No second homes, no investment properties. 2-4 Unit properties are eligible. 2-4 Unit properties are eligible. 8/4/2009

70. 70 Hope for Homeowners Eligibility Participation in program by existing lien-holders is strictly voluntary. Participation in program by existing lien-holders is strictly voluntary. If they participate they must: -Waive or forgive all penalties and fees related to default or delinquency. -Accept proceeds of new FHA loan as satisfaction of all existing liens. If they participate they must: -Waive or forgive all penalties and fees related to default or delinquency. -Accept proceeds of new FHA loan as satisfaction of all existing liens. 8/4/2009

71. 71 Hope for Homeowners Eligibility Debt to income ratio for all existing mortgages must be greater than 31% based on payments as of the date of application for H4H. Debt to income ratio for all existing mortgages must be greater than 31% based on payments as of the date of application for H4H. Ratio takes into account all mortgages and escrows, whether included in existing loans or not. Ratio takes into account all mortgages and escrows, whether included in existing loans or not. Borrower must have net worth of less than $1,000,000. Borrower must have net worth of less than $1,000,000. 8/4/2009

72. Hope for Homeowners H4H Loan Mortgage limits apply nationally. Mortgage limits apply nationally. 1 Unit 2 Unit 3 Unit 4 Unit $550,440 $704,682 $851,796 $1,058,574 1 Unit 2 Unit 3 Unit 4 Unit $550,440 $704,682 $851,796 $1,058,574 Loan must be fixed rate. No ARMs. Loan must be fixed rate. No ARMs. Term must be not less than 30 years and not more than 40 years. Term must be not less than 30 years and not more than 40 years. 72 8/4/2009

73. Hope for Homeowners Ratios on H4H Loan may not exceed… 31% front ratio and 43% back ratio if LTV is between 90% and 96.5% 31% front ratio and 43% back ratio if LTV is between 90% and 96.5% 38% front ratio and 50% back ratio if LTV is less than 90%. 38% front ratio and 50% back ratio if LTV is less than 90%. 73 8/4/2009

74. 74 Hope for Homeowners Hope for Homeowners Mortgage Insurance Premiums UFMIP not to exceed 3%. UFMIP not to exceed 3%. Annual MIP not to exceed of 1.5% of outstanding loan balance. Annual MIP not to exceed of 1.5% of outstanding loan balance. 8/4/2009

75. 75 Hope for Homeowners Secondary Financing Not permitted at time loan closes. All liens must be extinguished at the time the H4H loan closes. Not permitted at time loan closes. All liens must be extinguished at the time the H4H loan closes. Permitted after closing only where health and safety conditions exist and/or failure to repair will cause property deterioration. Permitted after closing only where health and safety conditions exist and/or failure to repair will cause property deterioration. 8/4/2009

76. 76 Hope for Homeowners Equity Sharing Initial equity is the difference between the appraised value at the time of loan closing and the original mortgage amount. Initial equity is the difference between the appraised value at the time of loan closing and the original mortgage amount. For example… 2008 Value$120,000 2008 Mortgage 115,800 Initial Equity$ 4,200 For example… 2008 Value$120,000 2008 Mortgage 115,800 Initial Equity$ 4,200 8/4/2009

77. 77 Hope for Homeowners Equity Sharing Equity sharing under this example … Equity sharing under this example … During YearFHA Share Borrower Share 1 $4,200$ 0 2 3,780 420 3 3,360 840 4 2,940 1,260 5 2,520 1,680 6 and later 2,100 2,100 During YearFHA Share Borrower Share 1 $4,200$ 0 2 3,780 420 3 3,360 840 4 2,940 1,260 5 2,520 1,680 6 and later 2,100 2,100 8/4/2009

78. 78 Hope for Homeowners Shared Appreciation Permits FHA to share up to 50% of any appreciation. Permits FHA to share up to 50% of any appreciation. FHA may share appreciation with or assign appreciation rights to former lien-holders to induce loan write-downs. FHA may share appreciation with or assign appreciation rights to former lien-holders to induce loan write-downs. Profit-sharing capped at appraised value when the existing loan was made. Profit-sharing capped at appraised value when the existing loan was made. 8/4/2009

79. 79 Hope for Homeowners Hope for Homeowners Former Subordinate Lien-Holders Borrower will not owe any of his/her share of appreciation to former lien-holders. Borrower will not owe any of his/her share of appreciation to former lien-holders. Permits financial incentives for servicers, originators and borrowers to participate. Permits financial incentives for servicers, originators and borrowers to participate. 8/4/2009

80. FHA Rehabilitation Program 80 8/4/2009

81. 81 FHA Rehabilitation Program What is Section 203k? One loan to finance both acquisition and rehab of a property. One loan to finance both acquisition and rehab of a property. Mortgage amount is based on projected value of the property with the work completed. Mortgage amount is based on projected value of the property with the work completed. Repair escrow account created and repairs completed after closing. Repair escrow account created and repairs completed after closing. 8/4/2009

82. 82 FHA Rehabilitation Program Eligible Uses To purchase a home and rehab it. To purchase a home and rehab it. To refinance a mortgage and rehab a home. To refinance a mortgage and rehab a home. To purchase a home on another site, move it onto a new foundation, and rehab it. To purchase a home on another site, move it onto a new foundation, and rehab it. Mortgage calculation worksheet available at http://www.hud.gov/offices/hsg/sfh/trn/training.cfm Mortgage calculation worksheet available at http://www.hud.gov/offices/hsg/sfh/trn/training.cfm http://www.hud.gov/offices/hsg/sfh/trn/training.cfm 8/4/2009

83. FHA Rehabilitation Program Maximum mortgage amount based on the lesser of the following: As Is property value (may use sales price on a purchase), plus cost of repairs; or As Is property value (may use sales price on a purchase), plus cost of repairs; or Existing debt on a refinance, plus the repair costs; or Existing debt on a refinance, plus the repair costs; or 110 percent of the "after improved" value. 110 percent of the "after improved" value. http://www.fhaoutreach.gov/FHAHandbook/pro d/infomap.asp?address=4155-2.1.C.5.h http://www.fhaoutreach.gov/FHAHandbook/pro d/infomap.asp?address=4155-2.1.C.5.h http://www.fhaoutreach.gov/FHAHandbook/pro d/infomap.asp?address=4155-2.1.C.5.h http://www.fhaoutreach.gov/FHAHandbook/pro d/infomap.asp?address=4155-2.1.C.5.h 8/4/2009 83

84. FHA Rehabilitation Program Down payment on purchase loans based on 3.5% of the lesser of … Sales price plus rehab costs; or Sales price plus rehab costs; or As-is value plus rehab costs; or As-is value plus rehab costs; or 110% of as-repaired value. 110% of as-repaired value. 8/4/2009 84

85. 85 FHA Rehabilitation Program Regular Section 203k Minimum repairs of $5,000. No maximum on repairs. Minimum repairs of $5,000. No maximum on repairs. Must use 203k Consultant to prepare detailed work write-up and to conduct inspections of work. Must use 203k Consultant to prepare detailed work write-up and to conduct inspections of work. Few limitations on the type of repairs. Few limitations on the type of repairs. 8/4/2009

86. 86 FHA Rehabilitation Program Streamline 203k ML 05-50. ML 05-50. No minimum amount of repairs. Maximum repairs of $35,000. No minimum amount of repairs. Maximum repairs of $35,000. 203k Consultant not required. 203k Consultant not required. If repair amount under $15,000 no 3 rd party inspections required. If repair amount under $15,000 no 3 rd party inspections required. No additions or structural repairs. No additions or structural repairs. 8/4/2009

87. FHA Rehabilitation Program How about commercial space on a 203k? 1 Story property 1 Story property 25% 25% 2 Story property 2 Story property 49% 49% 3 Story property 3 Story property 33% 33% 8/4/2009 87

88. FHA Rehabilitation Program Test your 203k knowledge. Where the property involves commercial space, the following policy applies… 8/4/2009 88

89. FHA Rehabilitation Program % of repairs spent of commercial space may not exceed % of commercial space. No. No. 203k funds may only be expended on health and safety repairs of commercial space. No. No. 203k funds may not be expended on repair of the commercial space. Yes. Yes. 8/4/2009 89

90. FHA Rehabilitation Program May be Streamline refinanced provided Fully executed certificate of completion is issued. Fully executed certificate of completion is issued. Escrow account is closed with a final release. Escrow account is closed with a final release. Required close out information is entered in FHA Connection. Required close out information is entered in FHA Connection. http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.6.C.4.i http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.6.C.4.i http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.6.C.4.i http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.6.C.4.i 8/4/2009 90

91. FHA Reverse Mortgage Program FHA has a special program for senior citizens who own their home. 91 8/4/2009

92. 92 FHA Reverse Mortgage Program Home Equity Conversion Mortgage (HECM) Allows seniors to tap into the equity in their homes. Allows seniors to tap into the equity in their homes. No payment is ever required of borrower. Borrower can never be forced from home, or forced to sell. No payment is ever required of borrower. Borrower can never be forced from home, or forced to sell. Only after borrower dies or permanently moves must loan be satisfied. Only after borrower dies or permanently moves must loan be satisfied. 8/4/2009

93. 93 FHA Reverse Mortgage Program HECM Eligibility and Qualifying All borrowers must be at least 62 years old. All borrowers must be at least 62 years old. No credit underwriting. Amount of loan calculated through a formula using the age of the youngest borrower, the value of the home, interest rate and anticipated appreciation. No credit underwriting. Amount of loan calculated through a formula using the age of the youngest borrower, the value of the home, interest rate and anticipated appreciation. 8/4/2009

94. 94 FHA Reverse Mortgage Program Ways To Receive Loan Proceeds Lump sum. Lump sum. Line of Credit. Line of Credit. Regular monthly payments to borrower. Regular monthly payments to borrower. Combination of these. Combination of these. 8/4/2009

95. 95 FHA Reverse Mortgage Program Housing Counseling ML 08-12, ML 08-28, ML 09-10. ML 08-12, ML 08-28, ML 09-10. Borrowers must receive housing counseling before a loan application can be processed. Borrowers must receive housing counseling before a loan application can be processed. Borrowers may be charged by agencies for counseling. Fee may be paid out of loan proceeds if borrower agrees. Borrowers may be charged by agencies for counseling. Fee may be paid out of loan proceeds if borrower agrees. 8/4/2009

96. FHA Reverse Mortgage Program Housing Counseling Lenders may not pay for HECM counseling, either directly or indirectly. Lenders may not pay for HECM counseling, either directly or indirectly. Lenders must provide prospective applicants with a list of at least 10 counseling agencies. Lenders must provide prospective applicants with a list of at least 10 counseling agencies. List must include five local agencies, and five national agencies. List must include five local agencies, and five national agencies. 8/4/2009 96

97. FHA Reverse Mortgage Program Housing Counseling The list of HUD-Approved Housing Counseling Agencies can be found at http://www.hud.gov/offices/hsg/sfh/hecm/he cmlist.cfm or The list of HUD-Approved Housing Counseling Agencies can be found at http://www.hud.gov/offices/hsg/sfh/hecm/he cmlist.cfm or http://www.hud.gov/offices/hsg/sfh/hecm/he cmlist.cfm http://www.hud.gov/offices/hsg/sfh/hecm/he cmlist.cfm Use the National HECM Housing Counseling Network at http://www.hud.gov/offices/hsg/sfh/hcc/hcc prof18.cfm Use the National HECM Housing Counseling Network at http://www.hud.gov/offices/hsg/sfh/hcc/hcc prof18.cfm http://www.hud.gov/offices/hsg/sfh/hcc/hcc prof18.cfm http://www.hud.gov/offices/hsg/sfh/hcc/hcc prof18.cfm 8/4/2009 97

98. FHA Reverse Mortgage Program Maximum Claim Amount Maximum claim nationally is set by HERA at 100% of conforming loan ($417,000) effective November 6, 2008. ML 08-35. Maximum claim nationally is set by HERA at 100% of conforming loan ($417,000) effective November 6, 2008. ML 08-35. Temporarily increased by ARRA to 150% of conforming loan limit ($625,500) effective 02/24/09 - 12/31/09. ML 09-07. Temporarily increased by ARRA to 150% of conforming loan limit ($625,500) effective 02/24/09 - 12/31/09. ML 09-07. 98 8/4/2009

99. FHA Reverse Mortgage Program Origination fee may not exceed 2% of maximum claim amount up to $200,000, then 1% of maximum claim amount above $200,000, but not to exceed $6,000. ML 08-34. Origination fee may not exceed 2% of maximum claim amount up to $200,000, then 1% of maximum claim amount above $200,000, but not to exceed $6,000. ML 08-34. Mortgagee and other parties barred from requiring, directly or indirectly, the purchase of other financial or insurance products as a condition of HECM approval. ML 08-24. Mortgagee and other parties barred from requiring, directly or indirectly, the purchase of other financial or insurance products as a condition of HECM approval. ML 08-24. 99 8/4/2009

100. FHA Reverse Mortgage Program HECMs may be used to purchase a property and obtain a HECM in a single transaction. ML 09-11. HECMs may be used to purchase a property and obtain a HECM in a single transaction. ML 09-11. HERA authorizes HECMs on co-ops. FHA is currently working on regulations to implement these provisions. Co-op association will have to approve use of HECMs in co-op. HERA authorizes HECMs on co-ops. FHA is currently working on regulations to implement these provisions. Co-op association will have to approve use of HECMs in co-op. 100 8/4/2009

101. Energy Efficient Mortgages 101 8/4/2009

102. 102 Energy Efficient Mortgages What Is an Energy-Efficient Mortgage? A mortgage which includes improvements to save energy. A mortgage which includes improvements to save energy. A borrower can finance into an already approved FHA loan, 100% of the cost of eligible cost-effective energy improvements. A borrower can finance into an already approved FHA loan, 100% of the cost of eligible cost-effective energy improvements. http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.6.D#1 http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.6.D#1 http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.6.D#1 http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.6.D#1 8/4/2009

103. 103 Energy Efficient Mortgages No additional borrower qualifying or appraisal. http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.6.D.2.b No additional borrower qualifying or appraisal. http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.6.D.2.b http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.6.D.2.b http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.6.D.2.b 5% of the lesser of property value, or 115% of the median area price, or 150% of the conforming loan limit can be added onto the approved mortgage amount. ML 09-18. http://www.hud.gov/offices/adm/hudclips/lett ers/mortgagee/index.cfm 5% of the lesser of property value, or 115% of the median area price, or 150% of the conforming loan limit can be added onto the approved mortgage amount. ML 09-18. http://www.hud.gov/offices/adm/hudclips/lett ers/mortgagee/index.cfm http://www.hud.gov/offices/adm/hudclips/lett ers/mortgagee/index.cfm http://www.hud.gov/offices/adm/hudclips/lett ers/mortgagee/index.cfm 8/4/2009

104. Energy Efficient Mortgages Improvements where the value of the energy saved is MORE than the cost of the energy improvements (including maintenance) qualify. Improvements where the value of the energy saved is MORE than the cost of the energy improvements (including maintenance) qualify. 4155.1 6.D.2.d 4155.1 6.D.2.d 8/4/2009 104

105. 105 Energy Efficient Mortgages Energy Improvements Energy improvements that are cost effective. Energy improvements that are cost effective. A qualified rater uses a tool known as a Home Energy Rating System (HERS). A qualified rater uses a tool known as a Home Energy Rating System (HERS). HERS report outlines improvements, costs and energy savings. http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.6.D.2.g HERS report outlines improvements, costs and energy savings. http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.6.D.2.g http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.6.D.2.g http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-1.6.D.2.g All improvements must be completed. All improvements must be completed. 8/4/2009

106. Energy Efficient Mortgages How can I find a HERS rater? Through Energy Star http://www.energystar.gov/index.cfm?fuseactio n=new_homes_partners.showHomesSearch Through Energy Star http://www.energystar.gov/index.cfm?fuseactio n=new_homes_partners.showHomesSearch http://www.energystar.gov/index.cfm?fuseactio n=new_homes_partners.showHomesSearch http://www.energystar.gov/index.cfm?fuseactio n=new_homes_partners.showHomesSearch Through the Residential Energy Servicers Network http://www.natresnet.org/ Through the Residential Energy Servicers Network http://www.natresnet.org/ http://www.natresnet.org/ 8/4/2009 106

107. Case Transfers FHA expects lenders to cooperate in effecting a timely transfer through FHA Connection. FHA expects lenders to cooperate in effecting a timely transfer through FHA Connection. Borrowers may not be charged a fee to effect the transfer. Borrowers may not be charged a fee to effect the transfer. The transferring lender must provide a copy of the appraisal to the new lender at no charge. The transferring lender must provide a copy of the appraisal to the new lender at no charge. http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-2.1.D.5. http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-2.1.D.5. http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-2.1.D.5 http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-2.1.D.5 8/4/2009 107

108. Case Transfers Other Processing Documents Other processing documents need not be provided to the new lender. Other processing documents need not be provided to the new lender. If processing documents are transferred, a fee may be negotiated between the two lenders. If processing documents are transferred, a fee may be negotiated between the two lenders. No charges for Streamline Refinances. No charges for Streamline Refinances. The transferring lender may retain any lock-in fee paid by the borrower. The transferring lender may retain any lock-in fee paid by the borrower. 8/4/2009 108

109. Case Transfers If the lenders will not cooperate on the transfer… Lender requesting a transfer should prepare a letter to HOC requesting cancellation of case. Lender requesting a transfer should prepare a letter to HOC requesting cancellation of case. Fax letter to: 215-656-3434 (DE, DC, MD, MI, PA, VA WV) 215-656-3438 (CT, ME, MA, NH, NJ, NY, OH, RI, VT). Fax letter to: 215-656-3434 (DE, DC, MD, MI, PA, VA WV) 215-656-3438 (CT, ME, MA, NH, NJ, NY, OH, RI, VT). 8/4/2009 109

110. Case Transfers Letter requesting cancellation should include… Steps taken to try to resolve the issue. Steps taken to try to resolve the issue. Any fees requested by transferring lenders. Any fees requested by transferring lenders. A letter signed by the borrower requesting the transfer. A letter signed by the borrower requesting the transfer. 8/4/2009 110

111. Case Transfers When the case number is transferred… The new lender may use the same appraisal provided it is not more than six months old. The new lender may use the same appraisal provided it is not more than six months old. A revised appraisal with the name of the new lender is not required. A revised appraisal with the name of the new lender is not required. The new lender should reimburse the former lender for the cost of the appraisal, but no additional fee is due the appraiser. The new lender should reimburse the former lender for the cost of the appraisal, but no additional fee is due the appraiser. 8/4/2009 111

112. Case Transfers Where a new borrower and a new sales contract are involved… The same appraisal may be used provided it is not more than six months old. The same appraisal may be used provided it is not more than six months old. The appraiser does not have to analyze the new sales contract. The appraiser does not have to analyze the new sales contract. 8/4/2009 112

113. Case Transfers Where a new borrower and a new sales contract are involved… The new lender should collect the appraisal fee from the new borrower, and then reimburse the former lender for the cost of the appraisal The new lender should collect the appraisal fee from the new borrower, and then reimburse the former lender for the cost of the appraisal No additional fee is due the appraiser. No additional fee is due the appraiser. http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-2.1.D.5.b http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-2.1.D.5.b http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-2.1.D.5.b http://www.fhaoutreach.gov/FHAHandbook/prod/in fomap.asp?address=4155-2.1.D.5.b 8/4/2009 113

114. Neighborhood Watch Your tool to track your FHA book of business, and those of your competitors. 114 8/4/2009

115. 115 Neighborhood Watch Provides reports on FHA loans with a beginning amortization date for a rolling 24 month period. Provides reports on FHA loans with a beginning amortization date for a rolling 24 month period. Reports can be pulled for a single lender or all lenders, at the institution level or at the branch level. Reports can be pulled for a single lender or all lenders, at the institution level or at the branch level. Reports can be pulled at the national level down to a single zip code. Reports can be pulled at the national level down to a single zip code. 8/4/2009

116. 116 Neighborhood Watch 8/4/2009

117. FHA Connection 6/8/2009 117

118. FHA Connection 6/8/2009 118

119. FHA Connection 6/8/2009 119

120. 120 FHA Connection 6/8/2009

121. FHA Connection 6/8/2009 121

122. FHA Connection 6/8/2009 122

123. FHA Connection 6/8/2009 123

124. 124 Neighborhood Watch Access is available to lenders through FHA Connection. After logging in, click on Single Family FHA, and on the next screen, click on Neighborhood Watch. Access is available to lenders through FHA Connection. After logging in, click on Single Family FHA, and on the next screen, click on Neighborhood Watch. Or, access the public site at https://entp.hud.gov/sfnw/public/ Or, access the public site at https://entp.hud.gov/sfnw/public/ https://entp.hud.gov/sfnw/public/ 8/4/2009

125. Where to Get More Information 125 8/4/2009

126. 126 Where to Get More Information 1-800-CALLFHA (225-5342): The source for all FHA questions. 1-800-CALLFHA (225-5342): The source for all FHA questions. www.fhaoutreach.gov/FHAFAQ Over 1,300 on-line frequently asked questions. www.fhaoutreach.gov/FHAFAQ Over 1,300 on-line frequently asked questions. www.fhaoutreach.gov/FHAFAQ www.fha.gov Up-to-date info about FHA programs and more. www.fha.gov Up-to-date info about FHA programs and more. www.fha.gov http://www.hud.gov/offices/adm/hudclips/index. cfm. Mortgagee letters, handbooks and more. http://www.hud.gov/offices/adm/hudclips/index. cfm. Mortgagee letters, handbooks and more. http://www.hud.gov/offices/adm/hudclips/index. cfm http://www.hud.gov/offices/adm/hudclips/index. cfm 8/4/2009

127. That’s all. Questions? 127 8/4/2009