STREAMLINED (k) Make the most of a good thing!

“Go Green” Home sales competitive & tight FTHOs still prevail Buyers seek out best & the most for their money Agents hone in on programs that will best benefit their buyers and move their listings Trends Call FHA

Boomers & others remain in their homes, fix- up funds may be tight The disabled will continue to require home modifications Investors will continue to sell homes that need repairs Lenders look for ways to expand their market More Trends Call FHA

More homeowners will be staying in their homes and many will buy “fixer uppers”. What will they want? To increase the functionality and comfort of their home The best value for their dollar To maintain/increase their property’s value To improve the appearance of their home Let’s Talk Rehabilitation Call FHA

Before & After Call FHA Don’t pass up buying a home that requires cosmetic repairs for lack of funds to fix it up!

A value-added, first mortgage product that: Eliminates the need to obtain a second mortgage, construction loan, use savings or incur credit card debt Allows a homeowner to enjoy the benefits now, not later … or never Helps real estate agents (and investors) sell properties that needs work Helps lenders expand their product line & market What is Streamlined (k)? Call FHA

A FHA-insured loan; fixed or adjustable rate That can be combined with other FHA programs and activities (such as EEM) That can be used to turn a FHA uninsurable property into an insurable one That can be used on a HUD Home or any other REO Where plans, consultants, engineers and/or architects are not required With no minimum cost threshold requirement so clients can make even the smallest of repairs What You Get Call FHA

Origination Fee 1% of the mortgage amount related to purchase price Supplemental Origination Fee Equal to the greater of $350 or 2.5% of the costs of the improvements, not to exceed $375 Allowable Fees Call FHA

Maximum loan amount is the lesser of: Purchase price (or “as is” value for refinances) plus rehabilitation costs, or 110% of “after improved” value Not to exceed maximum FHA loan limit for area Purchases require 3.5% cash investment Same credit underwriting as any other FHA loan The Loan Call FHA

Includes properties owned free & clear Only credit-qualifying refinances with appraisal allowed No cash back to borrower Acquisition cost must be used to determine the maximum mortgage amount if property owned less than 1 year Refinances Call FHA

Can be included in rehab costs: Total cost of rehab Supplemental origination fee and discount points Contingency reserves (at lender’s option) Inspection fees (if required) Building and other permits Title update costs What Can Be Included? Call FHA

It’s Easy Call FHA Any FHA lender can originate All property types eligible, even manufactured homes 1-4 units allowed Owner-occupants only Repairs are simple Funds are disbursed & work begins after closing

Must comply to local codes All required permits must be obtained Must be completed within 6 months* Improvements Call FHA Minimum none Maximum $35,000 * Lender may alter time limit

Which are Streamlined (k) eligible? a. Finish the basement b.Build a garage c.Replace roof, install skylights d.Buy new washer/dryer e.Add on a sunroom f.Install solar panels g.Put in new fence h.Enlarge room by removing a wall i.Septic or well replacement Improvements Call FHA Remember: Non-structural Minor Simple Cosmetic Upgrade Repairs identified in appraisal and/or discretionary repairs/ improvements

Roofs, Gutters, Downspouts HVAC, Plumbing, Electrical Systems Windows, DoorsFlooring, Carpet Painting, DrywallWeatherizationAppliancesAccessibility Improvements Improvement Examples Call FHA

Clearance exam must be preformed by state or EPA certified lead-paint inspector, certified risk assessor or sampling examination If a HUD Home, may receive a credit Credit not part of $35,000 Streamlined (k) limit Lead Paint Stabilization Call FHA

Landscaping or yard work Major remodeling Moving a load-bearing wall Room additions or add-ons Fixing structural damage Repairs that take longer than 6 months Repairs requiring more than 2 draws Not Permitted Call FHA

FHA - Serving Home Buyers Since 1934 EEM Allows the financing of energy efficient features along with the purchase or refinance of the home Makes a home more comfortable, more affordable and more marketable Can be used with any FHA program – 203(b), 203(k), Streamlined (k), etc Can be used on existing or newly constructed properties, on 1-4 unit properties & with any property type

EEM improvements (& weatherization items) can be added on top of the Streamlined (k) items Max FHA loan amount for area can be exceeded by the EEM amount Borrowers are qualified before the EEM amount is added to the final mortgage amount Cost of energy improvements & estimate of energy savings are determined by a HERS report EEM Call FHA

Lender must provide appraiser with all information Appraisal must list all repairs and/or improvements and include cost estimates Appraised value will be determined “after improvements” subject to completion Appraisal Call FHA

Funds are disbursed after closing Work is done quickly – maximum 6 months to complete* Work must be professional Can be combined with EEM to increase rehab dollars Property cannot be vacant for more than 30 days * lender may reduce Highlights Call FHA

Lender to decide if will allow FHA will accept if borrower can demonstrate that he/she has the knowledge, experience and expertise Mortgagor cannot be paid for his/her labor, only materials Borrower must provide lender with written estimates from suppliers Self-Help Call FHA

Form HUD To be revised 1/09 Streamlined (k) & 203(k) Worksheet Call FHA

The new cash investment requirements for case numbers assigned on/after 1/1/09 also apply to Streamlined and 203 (k) Until the new worksheet is released, refer to Listserv dated 1/16/09 on how to update the current form. In The Meantime… Call FHA

ML : Streamlined (k) guidelines ML : EEM guidelines ML : For Non- Profit Purchasers Only ListServ 1/16/09 Resources Call FHA

What happens to any remaining funds not used for rehab? They are applied to the principal balance. Must a lender complete test cases before originating Streamlined (k) loans? No, test cases are not required. Can a Streamlined 203(k) be assumed? Yes, but the repairs must be complete. These questions can be found at FHA’s FAQ page FAQs Call FHA

Streamlined (k) numbers should be higher, how can we increase? What is preventing you from participating in this program? Let us know! Tell Us! Call FHA

Thank you!

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