AMS Rural HousingAMS Rural Housing

We are financing 102% of the We are financing 102% of the American dream!American dream!

AMS Rural HousingAMS Rural Housing

Justin VaughtJustin Vaught

Sr. Mortgage BankerSr. Mortgage Banker

JustinVaught@amsaz.comJustinVaught@amsaz.com

(480)299-8565(480)299-8565

www.JustinVaught.netwww.JustinVaught.net

AMS Rural HousingAMS Rural Housing

The AMS Rural Housing program is dedicated to the preservation of rural communities. We partner with Rural Development, a division of the US Department of Agriculture, to help thousands of mortgage originators throughout the country put their customers into a Guaranteed Rural Housing (GRH) loan.

This program, administered through the US Department of Agriculture, features 102% financing for qualified moderate-income families looking to purchase single-family homes. For borrowers with little or no cash, it’s ideal since they need no down payment and no funds for closing.

AMS Rural HousingAMS Rural Housing

Guaranteed Rural Housing (GRH)Guaranteed Rural Housing (GRH)

Guaranteed Rural Housing – Guaranteed Rural Housing –

New Construction Pilot New Construction Pilot

GRH Program BenefitsGRH Program Benefits

No Money, No No Money, No ProblemProblem

Borrow more and Borrow more and pay lesspay less

15 Basic Rules15 Basic Rules Rurally Nice Rurally Nice

HomeHome

Borrowers Cash to Borrowers Cash to CloseClose

Average Cash to Close $158.75Average Cash to Close $158.75

Loans with $0 Cash to Close 60%Loans with $0 Cash to Close 60%

How do we do that?How do we do that?

No Down paymentNo Down payment

Finance Closing Costs and Finance Closing Costs and PrepaidsPrepaids

Unlimited Seller ContributionsUnlimited Seller Contributions

Unrestricted Gift FundsUnrestricted Gift Funds

What closing costs Can What closing costs Can be financed?be financed?

Lender feesLender fees

Escrows and first year insuranceEscrows and first year insurance

Third party feesThird party fees

How much can be How much can be financed?financed? 100% LTV of Appraised Value100% LTV of Appraised Value

AppraisalAppraisal $150,000$150,000Purchase PricePurchase Price $$145,000145,000Closing costs/pre-paids Closing costs/pre-paids

$5,000$5,000

Borrow More Pay Less Borrow More Pay Less Guaranteed!Guaranteed!

Guarantee Fee = Guarantee Fee = Loan amount x 2.0%Loan amount x 2.0%

Guaranteed to Pay Guaranteed to Pay Less!Less!

One time, up-front at closingOne time, up-front at closing

May be financed into loan amount May be financed into loan amount ** Above the Appraised Value **** Above the Appraised Value **

No monthly MI premiumNo monthly MI premium

FHA vs. GRHFHA vs. GRHPayment ComparisonPayment Comparison

FHAFHA GRHGRH

PurchasePurchase 98,000 98,000 98,000 98,000

Loan AmountLoan Amount 97,132 97,132 100,000 100,000

P&IP&I 679.16 699.21 679.16 699.21

MIPMIP 39.87 39.87 0.00 0.00

TotalTotal 719.03 719.03 699.21 699.21

GRH Program BenefitsGRH Program Benefits

15 Basic Rules15 Basic Rules

Rules 1-4 Borrower Rules 1-4 Borrower EligibilityEligibility1)1) Make enough, but not too muchMake enough, but not too much

http://eligibility.sc.egov.usda.govhttp://eligibility.sc.egov.usda.gov

2) House is in the right place2) House is in the right place

http://eligibility.sc.egov.usda.govhttp://eligibility.sc.egov.usda.gov

3) No other real estate owned3) No other real estate owned

4) Pay their own way4) Pay their own way

Rules 5-7 IncomeRules 5-7 Income

5) Full documentation, or ALT Doc5) Full documentation, or ALT Doc

6) 24-month employment history6) 24-month employment history

7) 12 months ancillary income7) 12 months ancillary income

-Bonus/Overtime/Part-time-Bonus/Overtime/Part-time

-SSI-SSI

-Disability-Disability

Rule 8 - RatiosRule 8 - Ratios

8)8) 29 and 41%29 and 41%

- Limited compensating factors- Limited compensating factors

- All debts > 6 months counted- All debts > 6 months counted

2/1 Buy Down2/1 Buy Down

Qualify at the start rateQualify at the start rate

Must have compensating factorsMust have compensating factors

– Similar housing paymentSimilar housing payment– History of savingsHistory of savings– Post high school education or technical trainingPost high school education or technical training– Verifiable history of salary increasesVerifiable history of salary increases– Debt to be paid off between 7 and 12 monthsDebt to be paid off between 7 and 12 months– Lender or Seller paidLender or Seller paid

Rule 9 Credit ScoresRule 9 Credit Scores

Tri-merged or Full RMCRTri-merged or Full RMCR

620 is the magic score!620 is the magic score!

Middle of 3, or lower or 2Middle of 3, or lower or 2

Unacceptable Credit Unacceptable Credit History IndicatorsHistory Indicators More than 1/30 in last 12 monthsMore than 1/30 in last 12 months

Bankruptcies/Foreclosures in last Bankruptcies/Foreclosures in last 36 months36 months

Outstanding tax liens or Outstanding tax liens or government debtsgovernment debts

Outstanding judgments in last 12 Outstanding judgments in last 12 monthsmonths

Unacceptable Credit Unacceptable Credit History IndicatorsHistory Indicators

Collections opened in last 12 Collections opened in last 12 monthsmonths

Unpaid collections w/o repayment Unpaid collections w/o repayment planplan

Debts written off in last 36 Debts written off in last 36 monthsmonths

Clouded CAIVR’s numberClouded CAIVR’s number

Mitigating Mitigating CircumstancesCircumstances

Circumstances were of temporary Circumstances were of temporary naturenature

Beyond the applicants’ controlBeyond the applicants’ control

Circumstances have been Circumstances have been removedremoved

Mitigating Mitigating Circumstances- Circumstances- ExamplesExamples

Loss of jobLoss of job

Delay or reduction in government Delay or reduction in government benefitsbenefits

Increased expenses, illness or deathIncreased expenses, illness or death

Dispute over defective goods or Dispute over defective goods or servicesservices

Things that make the Things that make the underwriters really underwriters really mad!mad!

Late pays after bankruptcyLate pays after bankruptcy

Bad credit with a bad letter Bad credit with a bad letter (or, no letter)(or, no letter)

Never had a housing payment, Never had a housing payment, already have credit problemsalready have credit problems

Rules 10-12 - CreditRules 10-12 - Credit

10)10) Explain and support adverse Explain and support adverse creditcredit

11)11) Housing – get 24, verify 12Housing – get 24, verify 12

12) First time homebuyers, 12) First time homebuyers, studentsstudents

Rules 13-15 Cash to Rules 13-15 Cash to CloseClose

13)13) Verify any cash to close > 2% Verify any cash to close > 2% oror

$1,000 whichever is lower$1,000 whichever is lower

14) Submit gift documentation14) Submit gift documentation

15) Provide terms of unsecured 15) Provide terms of unsecured loanloan

Rurally “not so” nice homeRurally “not so” nice home

Rurally “not so” nice homeRurally “not so” nice home

Rurally “not so” nice homeRurally “not so” nice home

Rurally “not so” nice homeRurally “not so” nice home

Rurally Nice HouseRurally Nice House

Rurally Nice HouseRurally Nice House

Rurally Nice HouseRurally Nice House

Escrow Holdback for Escrow Holdback for RepairsRepairs Determine as-improved appraised Determine as-improved appraised

valuevalue

Obtain itemized bid from a licensed Obtain itemized bid from a licensed

contractorcontractor

Itemize repairs on 1003 and 1980-21Itemize repairs on 1003 and 1980-21

RD approvalsRD approvals

Set up escrow at closingSet up escrow at closing

Complete repairs and inspectComplete repairs and inspect

(Minimum Repair Amount = $250, Max = (Minimum Repair Amount = $250, Max = lower of 10% or 10K, and must be completedlower of 10% or 10K, and must be completedwithin 30 days. All lender premiums are within 30 days. All lender premiums are held in escrow until the work is completed. held in escrow until the work is completed. Chase Administration Fee of $150.00) Chase Administration Fee of $150.00)