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Streamline 203k

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  • 1. FHA Streamline 203K PROGRAM TRAINING Offered through Affinity Lending Group Affinity Lending Group Desktop Underwriter is a registered trademark of Fannie Mae. Loan Prospector is a registered trademark of Freddie Mac. This presentation is a summary and is not complete. Contact your ALG AE for complete program guidelines. This information is for mortgage professionals only and should not be distributed to or used by consumers or other third-parties. Information is accurate as of the date shown below and is subject to change without notice. 07/24 /2008
  • 2.
    • Affinity Lending Group History
    • Program Details
    Introduction 06/06/09 Affinity Lending Group has been around since 2003. Since then, ALG has been opening doors to the American Dream. It’s all we do and we do it well. Discover today why Affinity Lending Group is your First Time Home Buyer and Down Payment Assistance Headquarters! Affinity Lending Group
  • 3. History of Affinity Lending Group
    • Affinity Lending Group is an independent residential Mortgage Broker.
    • Founded in 2003, Affinity Lending Group is a direct-lending mortgage broker approved as a lender by the Federal Housing Administration (FHA); the Veterans Administration (VA); the Federal National Mortgage Association (Fannie Mae); the Federal Home Loan Mortgage Corporation (Freddie Mac); the Government National Mortgage Association (Ginnie Mae); the California Housing Finance Agency (CalHFA); the California Public Employees’ Retirement System (CalPERS); the California Teachers’ Retirement System (CalSTRS); National Homebuyers Fund (NHF); Nevada Housing Division (NHD); and many other major secondary market institutions.
    • Having funded in excess of $1 billion in residential real estate loans, ALG has assisted more than two thousand families with their mortgage needs.  ALG enables families to enjoy the American Dream of Homeownership…“it’s the only thing we do.”
    • Affinity Lending Group has a longstanding tradition of providing unparalleled customer service and a reputation built on adding value to the home loan process.  That’s why ALG should be considered…“ YOUR FIRST LENDING RESOURCE ”.
  • 4. General Comments
    • A first mortgage that combines the purchase or refinance with the renovation costs
    • Fully disbursed at closing and insurable
    • Owner Occupied Only
    • Interest rate and discount points negotiable
    • Down payment and Credit underwriting the same as for any FHA loan
  • 5. Uses of Streamlined (k)
    • To buy a house
    • Refinance an existing loan
    • Make limited repairs
  • 6. Eligible Properties
    • 1-4 units
    • Existing more then 1 year (from the date ready for occupancy)
    • Condos (not co-ops)
    • Mixed-Use Properties
    • No Manufactured Homes allowed
  • 7. Eligible Improvements
    • Up to $35,000 of limited or uncomplicated
    • Repairs identified in appraisal
    • Discretionary repairs/ improvements
  • 8. Improvements such as;
    • Non-Structural repairs
    • Repair, Replace or Upgrade
      • Roof, gutters, downspouts
      • Existing HVAC systems
      • Plumbing and electrical systems
      • Flooring
    • Painting, interior and exterior
    • Weatherization
    • Appliances
  • 9. Improvements Continued
    • Repair, replace or add exterior decks, patios, and porches
    • Basement waterproofing
    • Window and door replacement and exterior siding
    • Septic and/or well repair or replacement
    • Improvements for accessibility
    • Lead-based paint stabilization or abatement of lead-based paint hazards
  • 10. Energy Improvements
    • FHA’s Energy Efficient Mortgage (EEM) can be used with the Streamlined (k)
      • Mortgagee Letter 2005-21
    • Cost effective EEM improvements can be added above $35,000 maximum
    • Weatherization items can be added to the repair escrow
  • 11. Ineligible Improvements
    • Major structural repairs
    • New construction (adding a room)
    • Repairs requiring detailed plans and specs
    • Any repair taking longer then 6 months
    • Repairs requiring more then 2 draws
  • 12. Contractor
    • Provide written work plan and cost estimates
      • Must include nature and type of repair and the cost of completion
    • Must be licensed and bonded for each specialized repair or improvement
    • Must agree in writing to complete the work for the amount of the cost estimate and within the allowed time
  • 13. Underwriting the 203(k) Loan
    • Unless changed by Mortgagee letters – follow the 4155.1 Handbook (appraisal)
  • 14. Appraisal Issues
    • Only one “as repaired” appraisal is required
    • Appraiser is given the contractor’s work plan and cost estimates
  • 15. What May be Included in Rehab Costs
    • Total cost of rehab (including Energy package and lead-based paint abatement costs)
    • Supplemental origination fee & discount points
    • Contingency reserves (at lender’s option)
    • Inspection Fee’s (if required)
    • Permits and other fee’s
  • 16. Who Can Get a 203(k)
    • Owner-occupants
    • NO Investors
  • 17. Standards for Work
    • Rehab construction must comply with HUD’s minimum requirements for existing units and local codes
    • Work must be done in a professional, workman-like fashion
  • 18. Allowable Lender Fee’s
    • Supplemental origination fee – 1 ½% of the rehab cost or $350, whichever is greater
    • Inspection fee’s (usual and customary)
  • 19. Rehab Period
    • The work must be completed within 6 months of the loan closing
    • The rehab period should be a realistic time to complete the work
  • 20. Draws
    • There will be no more than 2 draws per contractor
    • There may be no more then 2 inspections per contractor required by the lender
    • Lender may advance up to 50% of the estimated cost of material by a contractor prior to the start of work
  • 21. Eligible REO Properties
    • Those designated by the M&M as
      • “Insurable with Repair Escrow” (When the total cost of improvements exceed $5,000)
      • “Uninsurable” (Limited repairs up to $35,000)
    • Any property sold by HUD requiring lead-based paint stabilization
      • That stabilization and other repairs may be financed with Streamline (k)
  • 22. Lead-based Paint Stabilization
    • Can be financed by Streamline (k)
    • M&M must have complete Stabilization Plan and cost estimate
    • Purchaser signs 203(k) Rehab Financing Lead Agreement
      • Requires clearance exam and report to part of rehab and conducted before release of funds and occupancy
      • State or EPA certified lead-based paint inspector, certified risk assessor, or sampling technician must perform the inspection
  • 23. HUD’s Credit for Stabilization
    • HUD may reduce sales price by a credit equal to HUD’s contribution to the stabilization
    • Borrower is responsible for any costs over this amount
    • Credit from HUD is not part of the $35,000
  • 24. Sales Incentives
    • Reduced down payment – No further down payment is required for repair costs
    • Bidders given 60 days to close the 203(k) loan
    • GNND – buyer may add all closing costs and broker fees, less $100, into the 203(k) loan amount
  • 25.
    • On behalf of Affinity Lending Group, we thank you for joining our training today and hope the information provided was informative and will help you…
    • Building This Together !
    06/06/09 Affinity Lending Group