spring into homestyle and homepath renovation products · spring into homestyle and homepath...
TRANSCRIPT
Spring into Homestyle and
Homepath Renovation Products
Presented March 6, 2014
• Conventional Renovation Products
• HomeStyle Renovation
• HomePath Renovation
• Determining Max Loan Amount
• The Renovation Process
• Lenders
• Selling and Marketing
• Q&A
Agenda
Conventional Renovation Products
• HomeStyle & HomePath Renovation loans are your conventional rehab loan solution!
• Enables Borrowers to finance repairs and improvements with a single close
• The Borrower’s Contractors will complete agreed upon repairs to the subject property after a renovation loan closes
• Contractors will receive payment after completing repairs
HomeStyle Renovation
HomeStyle Highlights
• Borrowers are able to make renovations, repairs, or improvements totaling up to 50% of the as-completed value of the property with a first mortgage ▫ i.e. As completed value of home is $200,000-total repair costs can be up to $100,000
• Purchase or rate/term refinance▫ No cash out to the Borrower
• Offered on 1-4 unit owner occupied properties, 1- unit second homes and 1 – unit investment properties
HomeStyle Highlights
• Subject property may be existing or new • Condo’s, modular homes and PUD’s that meet FNMA guidelines▫ Additional Condo requirements: � Renovation work must be permissible under the
bylaws of the HOA� Work is limited to the interior of the unit, including
installation of fire walls in the attic
• Manufactured homes are not eligible• Mortgage insurance required on loans >80%LTV
▫ Standard MI is required
HomeStyle LTV Limits- Through DU
PROPERTY TYPE LTV
1-2 Unit Owner Occupied1 Unit Second Home
95%
3-4 Unit Owner Occupied1 Unit Investor
80%
• Purchase transactions▫ LTV is based on as-completed value & total renovation
costs cannot exceed 50% of the as-completed value
• Max loan amount▫ Take the lower of the Purchase price + total renovation
costs or the as-completed value and then multiply by LTV
• Example:▫ Sales Price= $100,000
▫ Total Renovation cost= $25,000
▫ As-completed value= $150,000
▫ LTV= 90%
▫ Max loan amount is….$125,000 X 90% = $112,250
Homestyle Max Loan Amount
Poll Question
• Refinance: LTV based on as-completed value & total renovation costs cannot exceed 50% of the as-completed value
• The maximum loan amount is the lesser of:▫ Unpaid principal balance + total renovation costs + closing costs –OR-
▫ As-completed value X max LTV• Example:▫ UPB= $125,000▫ Total Renovation cost= $25,000▫ Closing Costs= $9500▫ As-completed value= $200,000 X 80% LTV▫ Max loan amount is…..$159,500
HomeStyle Refinance Max loan amount
HomePath Renovation Highlights
• A HomePath Renovation loan allows Borrowers to purchase and renovate a Fannie Mae owned (REO) property with a single close▫ Purchases only
▫ Subject must be owned by Fannie Mae (the seller) AND designated eligible for the HomePath Renovation product
� The listing detail must show the HomePath Renovation product logo found on www.homepath.com
• Total renovation costs (including labor/material, contingency, etc.) is limited to 35% of the “as completed” value BUT no more than $35,000
� For example, as completed value is $200,000, max total renovation costs will be $35,000 (even though 35% of $200,000 is $70,000)
• The Borrower may not pay out of pocket for additional repairs beyond the maximum loan amount
HomePath Renovation Highlights
HomePath Highlights• Offered on 1-4 unit owner occupied properties, 1-unit second homes and 1-4 unit investment properties
• May be new or existing properties• Condo’s, modular homes and PUD’s that meet FNMA guidelines▫ Additional Condo requirements: � The Lender is not required to warrant the condo to
FNMA guidelines� Renovation work must be permissible under the bylaws
of the HOA� Work is limited to the interior of the unit
• Manufactured homes are not eligible
HomePath LTV Limits- Through DU
PROPERTY TYPE LTV
1 Unit Owner Occupied 95%
1 Unit Second Home 90%
2 Unit Owner Occupied1 Unit Investment
85%
3-4 Unit Owner Occupied2-4 Unit Investment
75%
Minimum Credit score is 660 required when LTV/CLTV/HCLTV is over 80%!
HomePath – MI & Interested Party
Contributions
• Mortgage insurance is not required on this program regardless of LTV
• Interested Party Contributions
� Owner Occupied homes above 90% LTV allow for a 6% seller contribution
� Second homes and investment properties are standards
HomePath DU Messaging
• Disregard the DU messaging for: ▫ Mortgage insurance requirement▫ Maximum amount of interested party contributions has been exceeded on primary residence homes with LTV/CLTV/HCLTV over 90%
▫ Cost of improvements is limited to 50%� Remember HomePath Renovation only allows up to a
maximum of 35% of as completed value but not more than $35,000- REGARDLESS OF DU FINDINGS
• DU findings will not indicate the loan is a HomePath
HomePath Max Loan Amount
• To determine loan amount:▫ Take the lesser of:
� As-completed value -or-
� Purchase price + total renovation costs
▫ Multiply by LTV
• Example: ▫ Sales Price= $150,000
▫ Total renovation costs= $30,000
▫ As-completed value= $200,000
▫ LTV= 95%
▫ Total loan amount is $171,000 (purchase price + renovation costs X 95%)
* Always remember to check that the total renovation costs are
less than $35,000 AND no more than 35% of the as-completed value
• Labor and Material
• Contingency Reserve of 10%- 15%
• Architect/Engineering fees, if applicable
• Inspection fee(s)
• Title update fee
• Permits, if applicable
• Mortgage payment reserve- HomeStyle only
Total renovation costs
Poll Question
• Renovations must be permanently affixed to the property and add value▫ Such as: � Interior renovation or improvements� Fences and landscaping� Decks� In-ground swimming pools
▫ Appliances not permanently affixed are not eligible
• Rehab cannot include new construction of out-buildings such as detached garages, pool houses, sheds/barns
Renovation Information- Both Programs
• Renovation must be started within 30 days of closing and completed within 180 days of closing
• HomeStyle only- there is no restriction on the type of repairs as long as the repairs are permanent and add value or a minimum dollar amount for the repairs▫ Remember HomePath is limited 35% of after improved value or $35,000 whichever is less
Renovation Information- Both Programs
Loan Process
1. Borrower selects property, Lender and the contractor
▫ If HomePath, Lender must obtain proof that property is eligible
2. Lender reviews contractor plans, bids and accepts contractor
3. Appraisal is ordered to determine as-completed value
4. Lender calculates max loan amount, underwrites the loan and clears the loan for closing
Loan Process - Continued
5. Loan closes6. Renovation work begins7. Based on the pre-determined draw schedule,
the Lender is contacted each time a draw is required
8. The Lender will order inspections including the final inspection to ensure work has been completed
9. Lender to release funds to Borrower and Contractor
* Remember- no cash back to borrower; any unused funds will be used to pay down principal
Renovation DisclosuresFORM NAME DESCRIPTION WHEN REQUIRED REQUIRED
SIGNATURES
Maximum Mortgage
Worksheet
Determines max loan
amount
Throughout loan process Underwriter
Contractor Profile Provides Contractor
information such as work
experience, financial
information and insurance
At application Contractor
Consumer Tips-
HOMESTYLE ONLY
Information on HomeStyle
program
At application Contractor
HomeStyle or HomePath
Construction Contract
Outlines renovation work
to be completed
At application Borrower & Contractor
Construction Loan
Agreement
Loan agreement between
the Lender & Borrower
detailing renovations
At time of closing Borrower & Lender
HomeStyle OR HomePath
Completion Certification
Acknowledges renovation
parameters
Post-Closing Borrower & Contractor
HomeStyle Change Order
Request
Changes to renovations
and/or costs
Post-Closing Borrower & Contractor
Lien Waiver Affidavit stating that there
are no contractor liens on
subject property
Post-Closing Contractor
Not All Lenders Are Created Equal
• Lenders must meet Fannie Mae’s strict requirements in order to offer both the HomeStyle & HomePath renovation products
• Lenders, like REMN Wholesale, must be approved by Fannie Mae before offering to their loyal Brokers
203k Standard 203k Consultant FNMA Homestyle FNMA Homepath
Occupancy Type Owner Owner Owner , 2ndHome and investment
Owner , 2ndHome & investment
Max LTV 96.5% 96.5% 95% 95%
High Balance Loan Yes Yes Yes Yes
Max Repair Amount 35,000 No limit 50% of after improved Value
35% of after improved value or 35,000 which is less
Min Repair Amount None 5,000 None None
Mortgage Insurance Requirement
Always Always Only if LTV over 80% Never
Borrower Contractor Relationship
NO NO Allowed Allowed
Type of Repair Allowed Non-Structural Both Both Both
Outbuildings NO Yes NO NO
Pools NO NO; 1,500 for repair Yes Yes
Building Additions NO Yes Yes Yes
Mold/Lead Paint removal
Yes Yes Yes Yes
Foundation Work NO Yes Yes Yes
Tear Down/Re-Build NO Yes NO NO
Selling and Marketing
Renovation Products
Selling HomeStyle
• Average loan size is 34% higher than FHA
• Great refinance product using after completed value only (no as-is value needed)
• Luxury items allowed, such as an in ground pool
• No MI when LTV is under 80%
• Standard FNMA credit guidelines
• If perception is reality….no bad press
Selling HomePath Renovation
• Exclusive listings for Fannie Mae REO properties; makes the listings perceived as special
• Business development for Realtor partners
• Fannie Mae spends a lot of money advertising these listings
• Fannie Mae increased concessions
• Condo’s without Fannie Mae approval
• No MI required
Sell the American Dream
• You have all the tools to help build the dream of homeownership but like any tool, if you aren’t skilled in that master craft, you lose your cutting edge
• Embrace our ever changing marketplace and use renovation loans as an opportunity
• Renovation is the one solution that ties our potential sales and marketing efforts together with Realtor Partners, Home Improvement Contractors, current and past customers and your LENDER
For Additional Information
• Review renovation products at www.efanniemae.com
• Contact your Lender and REMN AE to learn more about renovation products
• Visit www.remnwholesale.com to submit a helpdesk ticket for all renovation questions, review forms and submit your renovation loans!
Thank you for your time today!
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