Fannie Mae Home Style Renovation Loan Program Sagamore

Fannie Mae Home. Style Renovation Loan Program Sagamore Home Mortgage LLC Presented by – Tom Connors Account Manager February 19, 2015

Today’s Overview 1 • What is Home. Style? 2 • Where does it fit in today’s renovation market? 3 • How do I start & succeed?

FNMA Home. Style

What is the FNMA Home. Style? § Comparable to the Standard 203(k) § Incorporates a remodeling plan as part of the mortgage § Loan is based on “As Completed” Appraised Value § Loan is saleable and insurable right after closing § Six months to complete the renovation

Loan Characteristics § Purchase and refinance § Fixed rate 15 & 30 § FNMA conforming loan limits and MI § Principal Residence 1 -4 Family & Condos § 1 Unit Second Home § 1 Unit Investment

Home. Style LTV/CLTV § 1 unit 95% LTV/CLTV (SFR/PUD/Condo) (660 FICO) § 2 unit 85% LTV/CLTV (660 FICO) § 3 -4 unit 75% LTV/CLTV (660 FICO) § Second Home (1 Unit) 90% LTV/CLTV

Home. Style Lending § Not all lenders offer Home. Style § More flexibility in eligible improvements § Can accommodate changes in plans § General Contractors and Consultants help loans easily come together & close more

Today’s Market and Beyond

In the News § FHA loan limits have been reduced in many areas § FHA Mortgage Insurance Premiums may be more costly than Private Mortgage Insurance § Low interest rates for first mortgages encourage renovation, especially as an alternative to moving

More good News! § The Home Improvement Industry is a $303 Billion dollar a year business in the United States § The Home Improvement Research Institute is projecting 5% growth in the Professional Remodeling Market in 2015 and beyond § This growth is more than Double the rate of

Where is the market? § Any home looking for a change, unfinished or incomplete § Foreclosures and short sales § Older neighborhoods § Two – four family homes with rental units § Love it or List it – Fix up vs. Move up!

Who can lead me to this market? § Your Top Referring Realtor Relationships § Top Agents and offices you are trying to capture § Home Improvement & Specialized Contractors § Kitchens and Bathroom Remodelers § Windows, Siding and Roofing companies

Look for the Listing Code Words! (and market them with a plan) § “As Is” § “Charmer” § “Unfinished anything” § “Handyman Special” § “Room for Expansion” § “Needs Some TLC” § “Convert back to” § “Just Reduced” § § “Has Potential” § REO – Estate and “Bring your Imagination!” Municipal Tax Sales

Eligible Improvements? § Additions and expansions § Replace the kitchen or add a bath § Paint, wallpaper and flooring § Improve systems and exteriors § Garages, decks and enclosed porches and even in ground swimming pools!

Benefits to Borrowers § Can buy location and make the house the way they want it – now § One closing for the mortgage and improvements § Borrower chooses the improvements and they can be done after closing § Opportunity to buy low, renovate and create

Advantages to you § Fewer loans you cannot do – nearly every major or minor project is allowed. § Conventional Product that can attract customers, originators and Realtors because it offers solutions § Only limited to 50% of the after-improved value

Advantages to you § Differentiate yourself from competitors § Many lenders offer SOME renovation solutions § Larger loans with better collateral § Less price sensitive than “commodity” products § Referrals from results

Extended Benefits § Referrals and recognition for success with the choices in products § Consultants: Partners in a program § Realtors: Sell more homes faster § Contractors: Better projects with assured payments

Ready to start with Home. Style?

Plan is in place! § Use FHA Consultants in your area § Continue working with the consultants that know your company and renovation lending § Best solution for origination, processing, underwriting and post closing support § Best safe guard and advice for your

Origination Documents APPLICATION § Standard Application Documents § Consumer Tips – Form 1204 § Maximum Mortgage Worksheet – Form 1035 OTHER § Contractor Profile – Form 1202 § Plans & Specifications/Architectural Exhibits and/or Consultant Work Write

Underwriting Home. Style § Credit is credit – Qualify for Credit first! § Maximum Mortgage Worksheet – includes all the renovation and fees into the loan § After-improved Appraisal includes the project § Screen borrowers choice of contractor § Pre-Closing Underwriting Review by PHMC

Mortgage Insurance § Genworth § United Guaranty § Radian § Essent § MGIC • Specific requirements of each MI company in matrix

Maximum Mortgage Worksheet § A Maximum Mortgage Worksheet (MMWS) is required for every Renovation Mortgage § The MMWS is used to calculate the mortgage amount with allowable fees & charges § The MMWS establishes the renovation escrow § 10% Contingency Required

Other Documents PROCESSING/UNDERWRITING § Detailed Work Write-up § As-Completed Appraisal § Contractor Screening Information § Construction Contract – Form 3734

Closing Documents § § § Standard FNMA Closing Documents § Investor Rider to Security Instrument – Form 3738 Construction Loan Agreement – Form 3735 Construction Loan Rider to Security Instrument - Form 3737

Closing § Loan close in normal time frames § Borrower gets permits & Contractor begins work on the project immediately after closing § Loan is funded & escrow established at PHMC § Draw Process can begin

Draw Management § Set expectations for checks at 5 - 7 business days from inspection § Review and feedback same day disbursement request and documentation is received by PHMC § Checks cut the day complete & accurate request is received § Financed Mortgage Payments automatically applied (owner occupied properties only)

Key Reminders § FHA Borrowers don’t necessarily qualify for the Home. Style Renovation product based on credit, income, reserves! § Compare PMI + LLPA’s vs. FHA MIP for best option § Home. Style loan limits to $417, 000 and the high balance Home. Style mirrors your FHA county loan limit § No minimum $$$ of repairs

Questions?

Resources § Doug Woodley – Scenario Desk § douglas. woodley@phmc. com § 518. 280. 0188 Ext 212 § Tom Connors – Account Executive § Tom. Connors@phmc. com § 518. 280. 0188 Ext 213