PURCHASE/REHABILITATION PROGRAM PROGRAM OUTLINE

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1 PURCHASE/REHABILITATION PROGRAM PROGRAM OUTLINE PROGRAM STRUCTURE The improvement/rehabilitation portion of the first mortgage loan will be limited to a minimum of $2,000 and not to exceed a maximum of $40,000. The combined purchase price and proposed improvements cannot exceed New Hampshire Housing s maximum purchase price limits. ELIGIBILITY REQUIREMENTS All improvements must be completed within 180 days of loan closing. All loans must meet the standards established by the Single Family Mortgage Program. The repairs, renovations and improvements should be designed to address obsolescence, improve energy efficiency, improve safety and extend the useful life of the property. The borrower must provide the lender copies of contractor estimates with the Purchase and Sales Agreement. The estimates must identify the type of improvements to be made and include labor costs. The borrower must have signed contracts from an insured contractor at time of loan closing. Anticipated improvements cannot be changed after closing. Any modification to the original contracts will be at the sole discretion of New Hampshire Housing. ELIGIBLE PROPERTIES Eligible properties must meet standards of the Single Family Mortgage Program. APPRAISALS All appraisals will reflect the present condition value of the property with an addendum relative to the anticipated improvement value. If the appraiser identifies necessary repairs, beyond the Borrowers desired improvement list that are critical to the safety of the property, the Borrower must obtain 12/2006 1

2 contractor estimates to cover the additional repairs. The additional repairs can be financed in the Mortgage Loan, subject to New Hampshire Housing and HUD (if applicable) approval. The appraisal report must reflect an adequate as complete value. Maximum LTV is 97% (based on sales price plus rehab amount). LENDER RESPONSIBILITIES Lenders will be responsible for all procedures associated with the Single Family Mortgage Program. Additional requirements for purchase/rehabilitation loans include: Ensuring that contemplated rehabilitation is within established guidelines; Providing the Authority or its assignee and HUD (if applicable) necessary notification of rehabilitations based on estimates prior to closing. Ensuring that borrower has full contracts for planned improvements at closing; Submitting all funds collected at loan closing for rehabilitation and fees to the Authority al loan submission for purchase. Generally the lender will collect 110% of the cost of the necessary work to be completed at closing. (See eligible improvements) The Lender must inform the Borrower that work must be completed within one hundred and eighty (180) days after closing. NEW HAMPSHIRE HOUSING or its ASSIGNEE RESPONSIBILITIES The Authority or its assignee will be responsible for all inspections and disbursements of funds as required for the purchase/rehabilitation loans. A final Compliance Inspection Report and proof of payment for all work completed will be placed in each mortgage file. The set-aside of funds will be held in a separate holding account for disbursements as requested for work completed. Disbursements will be paid to the borrower(s) and the contractor jointly based on vouchers. All Disbursement requests will have a mechanic s lien waiver attached. A single advance disbursement, not to exceed 10% of the contract amount, may be requested from commencement of rehabilitation. The Authority will accept Purchase/Rehabilitation Loans guaranteed or insured by FHA, VA, RD or private primary mortgage insurance. All government loans must be accepted by the agency before closing and in accordance with agency requirements. 12/2006 2

3 Set-aside funds will be in a holding account separate from the Borrower s other escrow account at New Hampshire Housing or its Assignee. All funds remaining after completion of improvements will be applied to the principal balance of Borrower s outstanding loan. In instances where New Hampshire Housing escrow disbursements are transferred to its Assignee, the Assignee will prepare and execute necessary forms (92300 Mortgage Assurance of Completion) as an accepted form to HUD or New Hampshire Housing s (Compliance Inspection Form). Should New Hampshire Housing determine to assign the disbursement and inspection procedure, New Hampshire Housing will pay the Assignee fees at receipt of final Notice of Completion. FEES The Borrower will be charged a fee for the inspections and disbursement of funds. Additional fees will be collected from the Borrower for any inspections exceeding the anticipated two inspections. If additional inspections are not necessary, the fee not used will be refunded to the Borrower(s). (See current fee schedule) New Hampshire Housing will hold funds until receipt of all Compliance Inspections by the Assignee. 12/2006 3

4 New Hampshire Housing Purchase/Rehabilitation Program Eligible Improvements The repairs, renovations and improvements for a New Hampshire Housing Purchase/Rehab Mortgage Loan should address obsolescence, improve energy efficiency, improve safety and extend the useful life of the property. Examples of Generally Acceptable improvements include: a. Plumbing, electrical wiring, roofing, and heating. b. Replacement and installation of windows including storm windows, insulation. c. Replacement or upgrade of central air conditioning systems. d. Replacement of existing decks, balconies or fire escapes. e. Replacement of existing guardrails. f. Replacement of individual sewerage disposal systems. g. Replacement of individual well for consumption. (Escrow amount for a well is 200%) h. Updating of bathrooms and kitchens i. Structural improvements, addition of living space or a garage Examples of Generally Unacceptable improvements include: a. Tennis courts b. Swimming Pools c. Other luxury items All construction or work performed under the contract shall be in compliance with all state or local codes. 12/2006 4

5 Fee Structure for Rehab Loans HomeAccess $ includes fee for processing of the improvements, disbursement of funds and one inspection $ only if additional inspection is required Purchase Rehab Miles Fee Add l Insp. (from Concord) (includes 2 inspections) 0-50 $ $ $ $ $ $ /2006 5