The Amazing FHA 203(k) Helping Ohioans finance their new home and home improvements for 38 years.

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1 The Amazing FHA 203(k) Helping Ohioans finance their new home and home improvements for 38 years.

2 History of the 203(k) History of FHA 19? The introduction of insured mortgages The beginning 19? 203(k) - Do you know your ABC s A, B, C, D, E, F,G, H, I, J, K It s been a rollercoaster ride!

3 FY (k) Endorsement History

4 203(K)

5 What is a 203(k) Renovation Mortgage Renovation Loans offer a buyer the opportunity to buy a property and close as-is, financing both the purchase and repair money in one mortgage transaction. The appraisal inspection is performed as if the renovations were already complete. We close the loan and the property in it s AS-IS condition, payoff the seller and set up an escrow for repairs New loan is based on the future or subject-to value of the property Repairs prior to closing are not required nor started until after the closing.

6 Two FHA 203(k) Choices 203k Standard (Full) > $35,000 total renovation budge Structural Room Additions Complicated renovations 203k Limited (Streamline) < $35,000 in total light to moderate renovations

7 Two pots of money! 2 needs 1 mortgage 1 payment!

8 85% of homes in Ohio are 16 years old or older Prior to 's & 90's 10.7% 2000's 5.7% Prior to % 1940's & 50's 60's & 70s 80's & 90's% 2000's 60's & 70's 20.5% 1940's & 50's 41.5%

9 Buyers and Low Inventory More buyers than houses? Do buyers know about renovation mortgages? Obsolete housing? Homes in need of repair/updating? Showing the wrong price point based on pre-approval mount? Millennial buyers Boomerang borrowers/buyers

10 FHA Loan Limits for most Ohio counties

11 What Properties Are Eligible on 203(k) s? Owner-occupied! 1 to 4 unit properties Mixed-use properties Certificate of Occupancy 1 year old FHA approved* condo s

12 203(k) Added Value The ability to calculate the new maximum mortgage using 110% of the afterimproved value

13 Project Type Not all repairs & improvements add dollar-for-dollar value! Minor Kitchen Remodel Bathroom Addition Major Kitchen Remodel Two Story Addition Master Suite Attic Bedroom Family Room Addition Bathroom Remodel Deck Addition Replace Siding Home Office Replace Windows 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% % Cost Recouped each year, National Average

14 Typical Renovation Projects New Homeowner Minor or major kitchen and bath renovations Cosmetic changes Exterior (Deck/fence) Garage Addition Finish a lower level (basement) Change in household Bathroom Addition Room Addition Two Story Addition Home Office Long-Term Homeowner Major Kitchen and Bath HVAC Replacement Doors/Windows/Siding Plumbing Update Emergency/ Health& Safety LBP Mold Water Infiltration Safety Concerns

15 The Standard 203k Minimum $5,000 of eligible repairs. HUD Consultants are required For Major rehab projects Require an Up-front Feasibility Study (similar to a Whole House inspection) Contingency Reserve required of 10%, 15% or 20% The ability of financing up to 6 months of into the new loan. Required when structural repairs or landscaping is part of the renovation. No upfront monies to begin the work.

16 Limited 203k Highlights HUD Consultants are NOT required. Repairs/Improvements/Upgrades < $30,000 No Structural or other major repairs are allowed No major mold. Self-help is highly discouraged Lower fees No financing of mortgage payments Borrower/contractor receive up to 50% of the escrowed funds shortly after closing.

17 203k Limited Eligible Repairs Repair/Replacement roofs, gutters and downspouts Repair/Replacement/Upgrade of existing HVAC systems Repair/Replacement/Upgrade of plumbing and electrical systems Repair/Replacement of flooring Minor remodeling, such as kitchens, which does not involve structural repairs Exterior and interior painting Weatherization: including storm windows and doors, insulation, weather stripping, etc. Purchase and installation of appliance,- including free-standing ranges, refrigerators, washers/dryers, dishwashers and microwaves Improvements for accessibility for persons with disabilities Lead-based paint stabilization or abatement of lead-based paint hazards Repair/replace/add exterior decks, patios, porches Basement finishing and remodeling, which does not involve structural repairs Basement waterproofing Window and door replacements and exterior wall re-siding Septic system and/or well repair or replacement

18 Additional uses of 203(k) funds Conversion of a single unit property to a 2,3 or 4 unit dwelling property or vice versa Homes that have been demolished but have an intact foundation that will be used Mixed Use Property.. Maximum Square Footage Requirements* What is Commercial Space No repairs to commercial space (prior to close) Move a existing house from one site to another.

19 Additional uses of 203(k) funds Repair swimming pools No limit! Lead base paint remediation Selling HUD Homes Overcome Borrower s Objections Purchase REO foreclosures Remove blight

20 HUD New Sales Incentive Effective October 1st, the following sales incentives are available on all properties sold within the Philadelphia HOC region: Buyer Bonus: $100 down payments on HUD Homes financed with FHA-insured financing Agent Bonus: Real estate selling agents (agent for buyer) get $500 for every HUD home purchased with a FHA Rehab Loan In order to qualify for the broker bonus, the bid must have been awarded on or after October 1, 2016 and the purchase must be made with an FHA 203(k) loan. All HUD Properties available for sale can be found at

21 Knock, Knock.

22 Ohio s Before and After Go 203(k)!

23 Thank You!

24 HomeStyle Renovation Renovating Our Community One Home At a Time By: Marcy Ash, Staff Officer, Huntington Bank

25 HomeStyle Renovation Program Overview All inclusive 1 st mortgage Purchase or refinance including investment properties Finance repairs or improvements up to 50% of the As Completed value Cannot exceed a 95% LTV (or max LTV per property type) 2

26 What Types Of Repairs/Upgrades Are Allowed? Allowable repairs/upgrades can be ANYTHING that adds value and is permanently affixed to the property. For example but not limited to: Mold damage/repair Replacing or fixing a septic system Kitchen and bathroom remodels Adding a new roof Replacing carpet, hardwood floors or paint Finishing a basement NOT PERMITTED: Completion of Construction projects

27 KITCHEN REMODELS

28 BASEMENT RENOVATION

29 DECK ADDITIONS BEFORE AFTER

30 LANDSCAPING BEFORE AFTER

31 SIDING BEFORE AFTER

32 HOW DOES IT WORK?

33 How Does It Work? Borrowers can finance UP TO 50% of the as completed value (which includes a *10% contingency reserve) but CANNOT exceed 95% LTV. If the 10% contingency reserve is paid by the borrower at closing, it is not included in the 50%. Purchase price = $50,000 As Completed value = $75,000 Example $75,000 x 95% = $71,250 Max Loan Amt - $50,000 = $21,250 Allowable Repair Amt Min rehab amount = $5000 Max rehab amount = $250,000 *The contingency reserve is 10% of the amount of the renovation/repair amount. It is extra funds added to the account to cover unforeseen costs associated with the renovation/repairs. It can be financed or paid in cash from the borrower.

34 How Does It Work? Work must be performed by a registered, licensed or certified contractor or general contractor Contractor/general contractor must provide bid, contract, itemized plans/specs (I/A) signed and dated by all parties Appraiser will determine the as completed value of the home based on review of market data and the work to be done with documentation provided by the contractor(s)

35 Completion Of Work If the repairs affect the livability of the property, they must be completed within 60 days of closing Repairs that do not affect livability of the property must be completed within 12 months of closing

36 General Contractors More than 3 contracts OR $100,000+ in renovations. A General Contractor must be used A builder acceptance is required General contractors must submit a completed and signed builder acceptance package to Construction Lending for review

37 Draws Renovation funds (including the 10% contingency reserve) are placed in an escrow account with Huntington s Construction Lending Dept. 4 draws may be requested with a 5th disbursement to empty out any unused funds from the escrow account Unused funds will be applied as a principal reduction after all work has been completed and draws disbursed, UNLESS the contingency reserve was paid in cash, borrower may receive unused funds back or have them applied as a principal reduction.

38 Underwriting Guidelines Minimum Credit Score 620 *INVESTMENT PROPERTIES ABOVE 80% LTV = 720 Maximum loan amount = $417,000 *See above Approved Community Seconds are allowed as subordinate financing with a maximum 105% Combined Loan-to-Value

39 Can Borrowers Do Their Own Work? Yes but. Repairs cannot be more than 10% of the as completed value of the property The borrower may not be reimbursed for the cost of sweat equity but may be reimbursed for: Properly documented contract labor The cost of materials Must provide itemized bills or receipts Must document planned improvements and estimate costs Huntington must budget for the cost of labor and materials for the repairs so that if the borrower is unable to complete the work, a contractor can be hired to finish the repairs

40 HomeStyle Renovation Program FHA 203K vs the HomeStyle Renovation FNMA HOMESTYLE RENOVATION FHA 203K INVESTMENT PROPERTIES COSMETIC UPGRADES LUXURY ITEMS ROOM ADDITIONS SQUARE FOOTAGE ADDITIONS PURCHASES & REFIS DOWNPAYMENT REQUIREMENT 5% for primary homes 20% for second homes 15% for investment property 3.5% MAX LTV 95% 96.5% MAX LOAN AMOUNT $417,000 $271,050 MORTGAGE INSURANCE Above 80% LTV Included for the Life of the Loan

41 HomeStyle Renovation Program Lenders Not all Lenders can offer the HomeStyle Renovation product Lenders must meet special Fannie Mae Lender requirements in order to be approved to offer the product

42 Together, We Can Make A Difference In The Lives Of Families, Individuals and Our Communities 19