STREAMLINED k Make the most of a good

STREAMLINED (k) Make the most of a good thing!

Trends “Go Green” Home sales competitive & tight FTHOs still prevail Buyers seek out best & the most for their money Agents hone in on programs that will best benefit their buyers and move their listings 1 -800 -Call FHA www. FHA. gov

More Trends Boomers & others remain in their homes, fixup funds may be tight The disabled will continue to require home modifications Investors will continue to sell homes that need repairs Lenders look for ways to expand their market 1 -800 -Call FHA www. FHA. gov

Let’s Talk Rehabilitation More homeowners will be staying in their homes and many will buy “fixer uppers”. What will they want? To increase the functionality and comfort of their home The best value for their dollar To maintain/increase their property’s value To improve the appearance of their home 1 -800 -Call FHA www. FHA. gov

Before & After Don’t pass up buying a home that requires cosmetic repairs for lack of funds to fix it up! 1 -800 -Call FHA www. FHA. gov

What is Streamlined (k)? A value-added, first mortgage product that: Eliminates the need to obtain a second mortgage, construction loan, use savings or incur credit card debt Allows a homeowner to enjoy the benefits now, not later … or never Helps real estate agents (and investors) sell properties that needs work Helps lenders expand their product line & market 1 -800 -Call FHA www. FHA. gov

What You Get A FHA-insured loan; fixed or adjustable rate That can be combined with other FHA programs and activities (such as EEM) That can be used to turn a FHA uninsurable property into an insurable one That can be used on a HUD Home or any other REO Where plans, consultants, engineers and/or architects are not required With no minimum cost threshold requirement so clients can make even the smallest of repairs 1 -800 -Call FHA www. FHA. gov

Allowable Fees Origination Fee 1% of the mortgage amount related to purchase price Supplemental Origination Fee Equal to the greater of $350 or 2. 5% of the costs of the improvements, not to exceed $375 1 -800 -Call FHA www. FHA. gov

The Loan Maximum loan amount is the lesser of: Purchase price (or “as is” value for refinances) plus rehabilitation costs, or 110% of “after improved” value Not to exceed maximum FHA loan limit for area Purchases require 3. 5% cash investment Same credit underwriting as any other FHA loan 1 -800 -Call FHA www. FHA. gov

Refinances Includes properties owned free & clear Only credit-qualifying refinances with appraisal allowed No cash back to borrower Acquisition cost must be used to determine the maximum mortgage amount if property owned less than 1 year 1 -800 -Call FHA www. FHA. gov

What Can Be Included? Can be included in rehab costs: Total cost of rehab Supplemental origination fee and discount points Contingency reserves (at lender’s option) Inspection fees (if required) Building and other permits Title update costs 1 -800 -Call FHA www. FHA. gov

It’s Easy • Any FHA lender can originate • All property types eligible, even manufactured homes • 1 -4 units allowed • Owner-occupants only • Repairs are simple • Funds are disbursed & work begins after closing 1 -800 -Call FHA www. FHA. gov

Improvements Must comply to local codes All required permits must be obtained Must be completed within 6 months* Minimum • none Maximum • $35, 000 * Lender may alter time limit 1 -800 -Call FHA www. FHA. gov

Improvements Remember: Non-structural Minor Simple Cosmetic Upgrade Repairs identified in appraisal and/or discretionary repairs/ improvements 1 -800 -Call FHA Which are Streamlined (k) eligible? a. Finish the basement b. c. d. e. f. g. h. i. Build a garage Replace roof, install skylights Buy new washer/dryer Add on a sunroom Install solar panels Put in new fence Enlarge room by removing a wall Septic or well replacement www. FHA. gov

Improvement Examples Roofs, Gutters, Downspouts HVAC, Plumbing, Electrical Systems Windows, Doors Flooring, Carpet Painting, Drywall Weatherization Appliances Accessibility Improvements 1 -800 -Call FHA www. FHA. gov

Lead Paint Stabilization Clearance exam must be preformed by state or EPA certified lead-paint inspector, certified risk assessor or sampling examination If a HUD Home, may receive a credit Credit not part of $35, 000 Streamlined (k) limit 1 -800 -Call FHA www. FHA. gov

Not Permitted Landscaping or yard work Major remodeling Moving a load-bearing wall Room additions or add-ons Fixing structural damage Repairs that take longer than 6 months Repairs requiring more than 2 draws 1 -800 -Call FHA www. FHA. gov

EEM Allows the financing of energy efficient features along with the purchase or refinance of the home Makes a home more comfortable, more affordable and more marketable Can be used with any FHA program – 203(b), 203(k), Streamlined (k), etc Can be used on existing or newly constructed properties, on 1 -4 unit properties & with any property type FHA - Serving Home Buyers Since 1934

EEM improvements (& weatherization items) can be added on top of the Streamlined (k) items Max FHA loan amount for area can be exceeded by the EEM amount Borrowers are qualified before the EEM amount is added to the final mortgage amount Cost of energy improvements & estimate of energy savings are determined by a HERS report 1 -800 -Call FHA www. FHA. gov

Appraisal Lender must provide appraiser with all information Appraisal must list all repairs and/or improvements and include cost estimates Appraised value will be determined “after improvements” subject to completion 1 -800 -Call FHA www. FHA. gov

Highlights Funds are disbursed after closing Work is done quickly – maximum 6 months to complete* Work must be professional Can be combined with EEM to increase rehab dollars Property cannot be vacant for more than 30 days * lender may reduce 1 -800 -Call FHA www. FHA. gov

Self-Help Lender to decide if will allow FHA will accept if borrower can demonstrate that he/she has the knowledge, experience and expertise Mortgagor cannot be paid for his/her labor, only materials Borrower must provide lender with written estimates from suppliers 1 -800 -Call FHA www. FHA. gov

Streamlined (k) & 203(k) Worksheet Form HUD-902700 To be revised 1/09 http: //www. hud. gov/offices/hsg/sfh/92700. pdf 1 -800 -Call FHA www. FHA. gov

In The Meantime… The new cash investment requirements for case numbers assigned on/after 1/1/09 also apply to Streamlined and 203 (k) Until the new worksheet is released, refer to Listserv email dated 1/16/09 on how to update the current form. 1 -800 -Call FHA www. FHA. gov

Resources ML 2005 -50: Streamlined (k) guidelines ML 2005 -21: EEM guidelines ML 2000 -08: For Non. Profit Purchasers Only List. Serv 1/16/09 1 -800 -Call FHA www. FHA. gov

FAQs What happens to any remaining funds not used for rehab? They are applied to the principal balance. Must a lender complete test cases before originating Streamlined (k) loans? No, test cases are not required. Can a Streamlined 203(k) be assumed? Yes, but the repairs must be complete. These questions can be found at FHA’s FAQ page 1 -800 -Call FHA www. FHA. gov

Tell Us! Streamlined (k) numbers should be higher, how can we increase? What is preventing you from participating in this program? Let us know! 1 -800 -Call FHA www. FHA. gov

Thank you!

Questions/Comments? Thank you for participating in this webinar Name: ______________ E-mail: ______________ Question/Comment: _______________________________________________ _______________________________________ Email to Susan. r. lyons@HUD. gov