1. Renovation Financing Presented By: Kim Renock, CMB, CRO

2. What we will Cover  Why Rehab is important  What types of renovation financing are available  How it benefits homebuyers & homeowners  How it benefits your cu  How it can be used  How it works

3. Why Rehab is Important  At least 30% of listings are foreclosure or pre- foreclosure sales  Over 50% of our existing home stock is over 25 years old  Revitalizing homes helps increase values in neighborhoods even in a declining market  Creating Sustainable Home Ownership

4. Homebuyer/Homeowner benefits  Buy and make the house a home, with one closing!  Repairs can be minor or major, few restrictions  Up to 6 months to complete the work  Low, Fixed rates  Qualify for the loan based on after completed value  Low Down payments

5. Benefits to The Credit Union  Seize the purchase business  Develop Realtor Relationships  Full Service Mortgage lending  Neighborhood revitalization  Close before work is complete  Increase Revenue potential  Be one of a Few Lenders offering these products

6. What can you do AND MORE!!!!

7. Types of Renovation Financing 203KHomestyleHomepathPortfolio Down Payment Requirement3.5%5%3%? Self Help AllowedNoYes*No? Owner Occupied OnlyYesNo ? Licensed Contractors RequiredYes ? Minimum Rehab AmountNo ? Work Done Prior to ClosingNo ? RefinancesYes No?

8. FHA 203K- Highlights Most Common Rehab Loan Two Types of Loans- Streamline & Full Flexible Down Payment Sources Minimum Credit Scores- Varied No reserve Requirements Up to 110% of the After improved value

10. Homestyle- Highlights Recent Changes Has Been under utilized due to previous lack of MI No minimum repair amount Repairs limited to 50% of After improved value More lenient on type of repairs Max LTVs O/O-95% SH-80% INV-75%

11. Homepath- Highlights Only Available on Fannie Mae Owned Homes Purchase Only NO MI Flexible Down Payment Sources Limited availability NOO Co-borrowers allowed MAX LTV OO-97% SH-90% 85%-INV Limited to 35% of the AS completed value in repairs and $35,000

12. Homepath- pricing

13. How it Works  Member locates property in need of repair  Offer is place contingent on an inspection*  Member provides appraiser a list of the desired repairs  Appraisal is completed, an as-is and an after completed value are determined  Bids for the work are collected from Licensed contractors  Contractors are required to provide proof of liability & workman’s comp insurance and sign a contractor’s agreement

14. How it Works  Underwriter reviews appraisal and bids and determines maximum mortgage amount  Loan is set for closing  A rehabilitation escrow is set up to disburse funds upon completion of work items  Depending on the program type a portion of the Rehab escrow may be released at closing  Work is commenced after closing

15. *Sales Contract A provision should be included in the sales contract that the buyer has applied for Section 203(k) Financing, and that the contract is contingent upon loan approval and the buyer’s acceptance of additional required improvements as determined by HUD or the lender. W A R N I N G It is important to remember that HUD may require additional repairs that the borrower did not plan on doing. The additional repairs must be completed in order to secure the loan.

16. Real Life Examples  We are closing a deal next week that had fallen apart with another lender because they were requiring repairs to be done prior to closing and the bank who owned the property would not allow the work to be done. By offering the 203K the work can be done after closing and the borrowers were able to add some improvements they thought they would save for over the next 5 years.

17. Real Life Examples  Two weeks ago we closed a loan for a young man that has been shopping for houses for 2 years. Unfortunately, the properties in his price range all needed work. After seeing many properties and working with 3 different agents over the 2 years in just a few weeks time he found a house and made plans to make it his home.

18. The Math  Average cost to repair/replace:  Roof  Furnace/Central Air  Appliances  Carpet/flooring  Kitchen Cabinets  Windows  $30,000-$35,000 Based average costs for a 1500 sq ft home  To accumulate via savings over 5 years:  $500 per month  To finance with the new home purchase:  Approx. $160

19. Questions??

20. Thank you