FHA 203(k) Program Overview Sagamore Home Mortgage LLC Presented by – Tom Connors Account Manager February 19, 2015

Today’s Overview 1 2 3 Where does it fit in today’s market? What is the FHA 203(k)? 2 How do we start Originating 203(k)’s 3

Today’s Market Always a Market

In the News Harvard’s Joint Center for Housing is projecting a steady growth in remodeling this year National Mortgage News article points to double digit growth Continued low interest rates for first mortgages encourage renovation.

Where is the market? Any home completed for at least one year Foreclosures and short sales Older neighborhoods – outdated homes Refinance Stated Purpose – Home Improvements Borrowers with Limited to No Equity

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 that are done after closing Create Equity on Purchase or leverage future value on Refinance loans with little or no equity

Advantages to you Differentiate yourself from or eliminate competition Attract or Retain more Realtors, Customers or builder/remodeler referral sources Larger loans with better collateral

More advantages to you ! Less rate/price sensitive than “commodity” products Close more loans – nearly every major or minor project imaginable is allowed Only new swimming pools, hot tubs and other “luxury items” are ineligible

203(k) Program

What is the FHA 203(k)? A fully disbursed 1st Mortgage with escrow established for repairs and improvements Fixed Home Improvement Plan in place at closing Not an open ended Equity Loan/Line Escrow Funds Disbursed at or after closing

All 203(k) Loans Purchase and refinance Fixed and Adj. rates Standard FHA loan limits and MIP Manufactured Homes HUD REO & $100 Down GNND 1-4 Family Owner Occupied- Conversions Mixed Use & Condos

Eligible Improvements? Additions-expansions -unfinished space Functional Obsolescence–Deferred Maintenance Remodel kitchens & baths – flooring Replace Mechanical Systems or appliances Windows-siding-roofing - garages, decks and enclosed porches

Standard vs. Streamlined 203(k) Two formats: Standard 203(k) & Streamlined 203(k) (Limited Repair) Regular FHA loan which incorporates a remodeling plan as part of the mortgage Loan is saleable and insurable right after closing Up to six months to complete the renovation

Standard 203(k) Not all lenders offer FHA 203(k) Standard With a consultant and a general contractor, the loan moves more quickly More projects can be done – Bigger Loans! Can accommodate changes in plans

Streamlined 203(k) Limited Repairs 1 to 3 Specialized Contractors Fixed remodeling plans No changes or extensions Simple uncomplicated projects

Extended Benefits Reputation and referrals for success with 203(k) Consultants: Partners in a successful program Realtors: Sell more homes faster Contractors: Better projects with assured payments

Microsoft Engineering Excellence Ready to start with 203(k)? Microsoft Confidential

How do we add 203(k)? Consultants are the key to a successful program Required for Standard & recommended for Streamlined Lender Locates FHA Consultants in your lending areas (Lender Select) Interview and get samples of Work Write- Ups

Consultant = Great Resource for you and your customer! Evaluates the property for required work, suggested work and borrower’s wish list Does a feasibility study or work write-up and cost estimate or evaluates bids for Streamlined 203(k) Fee can be financed in the mortgage Helps the appraiser to “see” the after- improved value for better appraised value

What happens next? Pre-Qualify Borrower (Credit is Credit) Discuss desired repairs & improvements Educate Borrower on Loan Product via the 203(k) Borrower’s Acknowledgment Complete the Maximum Mortgage Worksheet Are they ready for a consultant?

Underwriting the 203(k) Credit is credit Maximum Mortgage Worksheet – includes all the renovation and fees into the loan After-improved Appraisal includes the project Screen borrower’s choice of contractor

Closing Loan can close in normal time frames Obtain Building Permits and Contractor begins work on the project Loan is purchased & escrow established at Platinum Home Mortgage

Managed Draw = Platinum Your Borrower, Consultant, Contractor and other vendors contact or are contacted by Platinum Home Mortgage We order inspections, title updates etc……. Anticipate checks – 5 to 7 business days from inspection Checks sent directly to customer same day request is complete

Managed Draw – Continued We post and pay interest on escrow at .10% Any financed mortgage payments are automatically applied when due We provide the customer and you with ongoing accounting We manage towards final completion, final accounting and case close out

PHMC Customer Focus Our Turn Around Times are always same day or next day on each step in the process Our goal is a completed project and a satisfied customer, Realtor, Builder/Remodeler You maintain your excellent reputation in market & gets referrals!

Questions? Tom Connors Account Manager tom.connors@phmc.com Direct: 518.280.0188 x213 Toll Free: 855.847.7462 x213 Doug Woodley Product Support Representative douglas.woodley@phmc.com Direct: 518.280.0188 x212 Toll Free: 855.847.7462 x212