FHA 203k One Product with Two Options: Streamline and Full Consultant

Spring 2014

What’s the Same for Both Options?

• Primary residence only

• Standard FHA underwriting

• Purchase LTV=96.5% of Acquisition Cost

• Acquisition cost= Sales price + total renovation cost

• Non HUD REO purchases appraisal based only on the After Improved Value (current value not considered)

• Non Condo purchases LTV can be based on 110% of After Improved Value

• All repairs are completed after the loan CLOSES

What’s the Same for Both Options?

• Contractor must be licensed and insured with state/county where property is located

• Borrower cannot have any direct relationship with contractor

• Contractor bid must itemize both material and labor

• Contractor bid cannot contain any “luxury items”

• Typical loan closes within 45 days of contract ratification (25 days from receipt of signed contractor bid)

One Product with Two Options

• Streamline

– Allows up to 3 licensed contractors

– Allows limited borrower self help option

– HomeBridge disburses 50% of the final contractor bid at closing to borrower and contractor

– Final disbursement check (remaining 50%) done within 10 days of completion of all improvements

– 1 unit properties

– Maximum $35,000 Total Renovation Cost ($31k Material & Labor)

One Product with Two Options

• Consultant

– No self help

– 1 main General Contractor and 1 specialty contractor (case by case)

– Project managed by consultant

– 1 to 4 unit properties

– No funds for material/labor disbursed at closing

– Typically requires 4 to 5 draws (10% hold back on each draw)

– No limit on renovation cost

– Major repairs the norm…think replace/construct/demolish

One Product with Two Options

• Consultant

• HUD trained professional to manage project• Feasibility study in place of Home Inspection• Replace the “home warranty” by

replacing/repairing all mechanical items in the home

• $800 Consultant Fee same as $350 Home Inspection Fee and $450 Home Warranty Fee

• Homebuyer uses feasibility study to shop contractors

Examples of Eligible Repairs

• Roofs, gutters, down spouts• Heating/cooling systems• Plumbing/electrical systems• Carpet and flooring• Kitchen and bathrooms• Energy Efficient appliances• Window and door replacement• Painting and siding• Basement remodeling• Mold, lead paint abatement and water damage• Room additions and garage• Well and septic systems

Final Reason for Offering a 203k Option

• Take the fear out of the appraisal

– Sales price is used as the “as is value”

– Appraiser only determines the “after improved value”

– 203k allows LTV to be based on 110% of After Improved Value

– All repairs are completed after closing

• Market not what a property is “today” but what it can be in less than 6 months

– Location, location, location!!!

• Homeowner gets a personalized improved home with added comfort and enjoyment

Contact

This is a business-to-business communication provided for use by mortgage professionals only and is not intended for distribution to consumers or other third parties. It is not an advertisement; as such term is defined in Section 226.24 of Regulation Z. REMN Wholesale, a division of HomeBridge Financial Services, Inc. Corporate NMLS #6521, AL Consumer Credit License 21077; AZ Mortgage Banker License 922458; Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act. 4130749  CO Mortgage Company Registration, Regulated by the Division of Real Estate; CT Mortgage Lender License 10642; DE Chapter 22 Licensed Lender 11772; DC Mortgage Dual Authority License MLB6521; FL Mortgage Lender License ML100000179; GA Mortgage Lender License 22495; IL Residential Mortgage License MB.6760732; IN-DFI First Lien Mortgage Lending License 15700; IA Mortgage Banker License 2006-0328; KS Mortgage Company License MC.0025113; KY Mortgage Company License MC76089; LA Residential Mortgage Lending License; ME Supervised Lender License SLM11915; MD Mortgage Lender License 12402; MI 1st Mortgage Broker/Lender/Servicer Registrant #FR0017790; MN Residential Mortgage Originator License MN-MO-6521; MS Mortgage Lender License 6521; MO Residential Mortgage Loan Broker License 10-1956-A; NH Mortgage Banker License 16429-MB; NJ Residential Mortgage Lender License 9200151; NM Mortgage Loan Company License 2315; Licensed Mortgage Banker (B500691) – NYSDFS; NC Mortgage Lender License L-121619; OH Mortgage Broker Act Mortgage Banker Exemption MBMB.850046.000; OK Mortgage Broker License MB001985; OR Mortgage Lending License ML-3566; PA Mortgage Lender License 20394; RI Lenders License 20112804LL; SC-BFI Mortgage Lender/Servicer License MLS–6521; TN Mortgage License 3010; TX–SML Mortgage Banker Registration; VT Lender License 6093 MB; Licensed by the VA State Corporation Commission # MC3046; WA Consumer Loan Company License CL-6521; WV Mortgage Lender License ML-23522; WI Mortgage Banker License 38349BA. Information is subject to change without notice.

Ron Bolton Destin Florida Office

495 Grand Blvd Suite 206 Miramar Beach Florida 32550

NMLS # 184046Cell: 251-721-5626

rbolton@homebridge.com - www.HomeBridge.com/ronbolton