Introduction to 1x Close Construction to Permanent Loans

Construction and Renovation Group First Guaranty Construction and Renovation Group - Program Development - Construction Resource Team - Tools of the Trade - Role within the Transaction - Loan Administration - Internal - Exclusive Builder/Borrower solutions - Solutions – Partner in Transaction - Enable you to add value to your customer, originate and close professionally, and mitigate risk

One-Time Close (aka Construction-Perm or 1X Close) Definition Single loan to fund the purchase, or refinance, of a lot and the costs of building a new home. Loan is underwritten once prior to closing, closed, construction phase administered, then modified upon completion to permanent phase

One-Time Close Features and Benefits No Requalification – Much less risk and less chance for upset Borrowers No Update to Docs – Less paperwork across the board. Everyone likes less paperwork No new appraisal – Cost savings, and no chance for appraisal shortages after completion Interest rate protected during construction Cap Rate and Free Float Down – Chance for lower rate at conversion and rate is protected from rising Straight Extended Lock – Rate is locked throughout the construction phase. Better option for conservative Borrowers

1x Close Scenario Request Form The One Time Close Scenario Request Form is used for the front end structuring on ALL 1x Close Loans. Submitting this form, and the resulting Loan Builder results are critical to ensuring a smooth process.

So What Information do we Need In Order to Help? Land Details – Is it being purchased? Is it already owned? If so, how long have the borrowers owned it, and is there a current Lien? Construction Costs – These include every cost that the builder will incur during the construction. Examples are Material, Labor, Permits, Delivery Charges, etc. Months to Build – How many months will be needed to complete the project. Estimated “As-Complete” Value - What will be the value of the property after all construction is complete? EMD/Regular Closing Costs & Pre-Paids Send in Loan Structuring Requests to ConstructionResourceTeam@FGMC.com

LoanBuilder Outputs Transaction Summary Sheet

LoanBuilder Outputs Builder Summary Sheet

Details of Transaction Reference LoanBuilder Outputs Details of Transaction Reference

Appraisal Ordering and Schedule of Fees LoanBuilder Outputs Appraisal Ordering and Schedule of Fees

I Have Gathered the Information, Now What? Review the Transaction Structure and all details with clients Builder Acceptance package to builder. When they have completed the package, it should be returned to you and sent in to ConstructionReview@fgmc.com Take the initial Loan Application as normal. Order Appraisal (Use the Cover Sheet) Refer to our current Welcome Home (Conv) H.O.M.E (FHA) and HomeSweetHome (VA) rate sheets for current pricing. Loan is submitted

Builder Acceptance Review Why do we do this? – In order to ensure that the Builder has the financial reserves and credit to complete the project. We are not qualifying the Builder for the loan, just doing risk analysis on the project. Done once. Can be done prior to loan submission What we ask for – From the builder: Profile, License, Insurance and the items listed below Company Information How long have they been in business? Who are the principles of the company? Project History (Type, Volume) Current Projects Business References (Corr. can do) Supplier References Sub-Contractor References Previous Project References Business Financials Draws & Disbursements

Draw Schedules Stage or Line Item

Construction Project Review Appraisal – An “As-completed” or “Subject To” appraisal must be completed for the project. Construction Contract (what we need) Completed Builder/Borrower purchase agreement. Plans for the proposed project Specifications Draw Schedule / Cost Breakdown

Manufactured and Modular Home Submission Checklist

Home Submission Checklist Site Built Home Submission Checklist

The Parts and Pieces Interest Rate Construction and Permanent Phase Construction Phase Payments due during construction are Interest Only, Based on the drawn balance Rate during Construction is 6.5% (rate may change, refer to One Time Close rate sheet – will not change during construction period once loan is closed) Builder will be responsible for including the Interest and Soft Costs in their contract. Contract price may be increased to offset these costs resulting in no loss of net profit. Permanent Phase Rate is locked in prior to close. Cap and Float Down: 9 Month Construction Period. At time of completion of construction, loan will automatically modify at lower of capped rate or current market, with no additional fee or charges. 60 Day Lock that only covers until closing. Extended Lock: Straight lock available out to 270 days, refer to rate sheet. Lock must cover the entirety of the construction period

Interest Rate DISCLOSURE AND Lock In

H.O.M.E. (Home Opportunity Made Easy ) FHA 1X Close 96.5 % LTV, Limit to 90% w/ FICO below 580 Manufactured, Modular, and Stick Built Contingency Required 5% or $7,500 (whichever is more) on Stick Built. $3000 for Modular and Manufactured Builder pays construction period related costs Interest During Construction Construction loan fees/Inspection fees/underwriting Title updates, real estate taxes, hazard insurance Builder paid construction costs do not count against Max Seller Concessions. Loan Amount maximum is FHA’s max county loan limit Considered a Purchase Transaction from a MI and LTV perspective Non Delegated

Operation HomeSweetHome VA 1X Close 100% (depending on area, price and eligibility), but VA does not recognize lot equity. Manufactured, Modular, and Stick Built Contingency Required 5% or $7,500 (whichever is more) on Stick Built. $3000 for Modular and Manufactured Builder pays construction period related costs Interest During Construction Construction loan fees/Inspection fees/underwriting Title updates, real estate taxes, hazard insurance Builder paid construction costs do not count against Max Seller Concessions. Non Delegated Construction Fees/costs are not included in GFE, TIL or on HUD – these are costs/fees charged to Builder, they are not costs/fees charged to borrower that builder is paying (i.e. not seller concessions)

Operation Welcome Home Conventional 1X Close Max LTV is 70% (within FNMA loan limits) 2nd homes allowed but no Investment Prop. (Financed Interest Reserve not available on 2nd homes) Contingency Required 5% or $7,500 (whichever is more) on Stick Built. $3000 for Modular and Manufactured Manufactured, Modular, and Stick Built Builder pays construction period related costs Builder paid construction costs do NOT count toward max seller concessions. Non Delegated; DU Approve/Eligible (No Manual U/W) Construction Fees/costs are included in GFE, TIL and on HUD

FGMC Construction and Renovation Group: Your go to resource for 1x close Information How do I Calculate? Builder Adjusted Contract Price? Loan Amount? Cash at closing for borrower? Solutions (aka. making things simple) LoanBuilder – Accurate pricing and quick movement through scenarios Closing - Partnership with MRG (system solutions) Marketing and Training Support Use of this presentation (bits & pieces) as you see fit.

Process Flow Re-Cap 1.) LoanBuilder Calculations – Send to constructionresourceteam@fgmc.com (IMPERATIVE that this is first!) 2.) Builder Acceptance packet – Send to BuilderReview@fgmc.com 3.) Register Loan & upload docs to portal on our website. 4.) There are 2 u/w processes: credit & construction 5.) Collect & submit conditions if necessary. 6.) Close!

Construction Resource Team Support From Scenario to Closing Concierge Service What if? How do I? Can we? Should I? ConstructionResourceTeam@FGMC.com Questions/Scenarios BuilderReview@fgmc.com Builder Acceptance