1. Fannie Mae HomeStyle Renovation Loan Program
Sagamore Home Mortgage LLC
Presented by – Tom Connors
Account Manager
February 19, 2015
April 24, 2014

2. Today’s Overview 1 2 3 What is HomeStyle?
Where does it fit in today’s renovation market? 2
How do I start & succeed? 3
April 24, 2014

3. FNMA HomeStyle
April 24, 2014

4. What is the FNMA HomeStyle?
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
April 24, 2014

5. 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
April 24, 2014

6. HomeStyle 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 (680 FICO)
Investment 1 unit 85% LTV/CLTV (680 FICO)
April 24, 2014

7. HomeStyle Lending Not all lenders offer HomeStyle
More flexibility in eligible improvements
Can accommodate changes in plans
General Contractors and Consultants help loans come together & close more easily
No Self Help Allowed
April 24, 2014

8. Today’s Market
and Beyond
April 24, 2014

9. 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
New Construction and Sub-Division Lending is still in short supply
April 24, 2014

10. 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 GDP Growth which is projected at 2.1%

11. 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!
April 24, 2014

12. 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
Well Drillers!

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

14. 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!
April 24, 2014

15. 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 equity all in one loan
April 24, 2014

16. 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
100% Gift Funds (owner occupied 1 unit)
April 24, 2014

17. 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
April 24, 2014

18. 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
April 24, 2014

19. Ready to start with HomeStyle?
Microsoft Engineering Excellence
Ready to start with HomeStyle?
April 24, 2014

20. 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 customers
April 24, 2014

21. 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 Up
April 24, 2014

22. Underwriting HomeStyle
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
April 24, 2014

23. Mortgage Insurance Genworth United Guaranty Radian Essent MGIC
Specific requirements of each MI company in matrix
April 24, 2014

24. Maximum Mortgage Worksheet
A Maximum Mortgage Worksheet (MMWS) is required for every Renovation Mortgage
The MMWS is used to calculate the mortgage amount with all allowable fees & charges
The MMWS establishes the renovation escrow
10% Contingency Required
April 24, 2014

25. Other Documents Detailed Work Write-up As-Completed Appraisal
PROCESSING/UNDERWRITING
Detailed Work Write-up
As-Completed Appraisal
Contractor Screening Information
Construction Contract – Form 3734
April 24, 2014

26. Closing Documents Standard FNMA Closing Documents
Construction Loan Agreement – Form 3735
Construction Loan Rider to Security Instrument - Form 3737
Investor Rider to Security Instrument – Form 3738
April 24, 2014

27. Closing Loan can 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
April 24, 2014

28. Draw Management
Set expectations for checks at 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)
April 24, 2014

29. Key Reminders
FHA Borrowers don’t necessarily qualify for the HomeStyle Renovation product based on credit, income, reserves!
Compare PMI + LLPA’s vs. FHA MIP for best option
HomeStyle loan limits to $417,000 and the high balance HomeStyle mirrors your FHA county loan limit
No minimum $$$ of repairs
Second Home, Single Family Investor, and even pools!
April 24, 2014

30. Microsoft Engineering Excellence
Questions?
April 24, 2014

31. Resources Doug Woodley – Scenario Desk douglas.woodley@phmc.com
Ext 212
Tom Connors – Account Executive
Ext 213
April 24, 2014