Reclaiming Vacant Homes Using M&T s Standard 203(k), 203(k) Limited and Homestyle Rehabilitation Mortgages

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1 Reclaiming Vacant Homes Using M&T s Standard 203(k), 203(k) Limited and Homestyle Rehabilitation Mortgages Presented by: Alle Ries, Regional CRA Officer Lillian Hernandez, CRA Mortgage Manager Sonja Hotaling, Operations Manager, Mortgages

2 Who Is M&T Bank? Founded more than 160 years ago, M&T has built a reputation for providing outstanding customer service. It s a tradition we re proud of, and one we pledge to continue M&T is one of the top 20 full-service U.S.-based commercial banks with $85 billion in assets and more than 800 branches and 1600 ATMs located throughout New Jersey, New York, Connecticut, Pennsylvania, Maryland, Washington, D.C., Virginia, West Virginia and Delaware M&T Acquired Hudson City Savings Bank in 2015 and we have 98 branches In addition to banking products, M&T and its subsidiaries offer customized private wealth and institutional services through Wilmington Trust, one of the largest personal trust providers in the U.S. 2

3 Competitive Strengths Leading FHA 203(k) lender nationally Recognized nationally for our renovation lending experience. M&T originates renovation loans through the correspondent channel on a national basis, wholesale channels 16 states and on a retail basis throughout the footprint All loan disbursements are handled by M&T the loan will not be sold during renovation In 2014, M&T funded over $430 million in 203(k) loans 3

4 M&T s Rehabilitation Mortgages The Purpose of Today s Webinar Is: To learn how to help transform vacant houses into owner occupied homes using M&T s 203(k) MakeOver, 203(k) Limited and HomeStyle Mortgage products To assist municipalities with their vacant property initiatives visit for an example of the program in action To learn how M&T s newest mortgage subsidy product can make this option even more affordable. Let s get started! 4

5 M&T s Rehabilitation Mortgages M&T offers 3 different rehabilitation mortgage products that allows purchasers to combine purchase and home improvement financing all-in-one FHA 203(k) Makeover Mortgage features a low 3.5% purchase downpayment which helps make qualifying easy FHA 203(k) Limited also features a low 3.5% downpayment and financing of up to $35,000 in renovation expense Homestyle Mortgage for buyers with 20% down who want to avoid mortgage insurance * Home must be located in a low-to-moderate income census tract in M&T Designated Areas or whose income is at or below 80% of the HUD Median Area Income in those areas. 5

6 M&T s Rehabilitation Mortgages The Basics Renovation/repair loan is consolidated in the mortgage; Eliminates the I like this house, but objection; Requires as little as $5,000 in renovation work; Expands the inventory of listings by making a fixer upper more feasible; Makes almost any residential property eligible for an FHA Mortgage; Helps with market value stabilization; Can be used for modernization, structural alterations, remodeling of kitchen or bath, siding, roofing, flooring, furnaces, air-conditioning, decks, even new appliances and landscaping; and Encourages buyers to look beyond a property s existing condition 6

7 M&T s FHA 203(k) Mortgage Features a low 3.5% down payment Buyers can purchase a home sooner because less cash savings is required Competitive interest rates - Helps qualify buyers Junior liens (subordinate financing) is permitted with restrictions Down payment assistance programs through municipalities are permitted No minimum rehab amounts with the Limited 203(k) option Up to borrower s maximum qualification amount 7

8 M&T s FHA 203(k) MakeOver Mortgage No income limits Opens the market up to more clients Financing is based on improved value of property Helps improve the market value in the neighborhood 8

9 M&T s FHA 203(k) MakeOver Mortgage Up to first 6 months of mortgage payments can be financed Closes as quickly as a regular deal; loan can close before improvements are completed Experienced, direct-endorsed processing and underwriting Ensures fast processing, fast closing Flexible 31/43 qualifying ratio Makes qualifying easier Low FICO requirement Helps more buyers get approved Minimum of 580 for both M&T 203K MakeOver & M&T 203K Limited Minimum of 620* for the HomeStyle product 9

10 M&T s FHA 203(k) Limited Mortgage Ability to finance up to a total of $35,000 in renovation expenses Makes more properties in needs of renovation marketable Fast approvals with streamlined paperwork Ensures fast processing and fast closing No minimum dollar amount of renovation work that needs to be performed Eliminates the I like this house, but objection 10

11 M&T s FHA 203(k) Limited Mortgage Up to half of the contractor s invoices can be paid up front for materials except in cases when lead based paint or mold remediation is necessary Helps to keep the improvement project on schedule Flexible 31/43 qualifying ratio Makes qualifying easier 11

12 M&T s Homestyle Mortgage Second homes/investment properties are eligible Increased availability to more properties and buyers No minimum dollar amount of renovation work that needs to be performed Allows for minor and major updates to be completed by qualified contractors; no self-help work can be performed and all materials must be included in the renovation budget. Up to 95% financing for the purchase and improvement of a home Requires less out-of-pocket cash savings 12

13 M&T s Homestyle Mortgage Financing based on as completed appraised value and borrowers can use up to 50% of that value for improvements/repairs 28/36 Qualifying ratio Makes qualifying easy 13

14 Other benefits of the M&T FHA Renovation Programs when using the M&T FHA Community Program: At M&T we know buying a house takes a lot of planning, but it doesn t have to take a lot of money. With FHA Financing from M&T, homebuyers don t need to worry about having a lot of cash on hand. M&T s FHA Community Program offers: Below-market interest rates available to all qualified borrowers and for buyers purchasing in low-to moderate income designated areas The ability to move in with a low downpayment 100% of homebuyers downpayment and closing costs may come from gift funds The seller has the ability to contribute a portion of the loan amount to pay certain closing costs Less-than-perfect credit allowed 1-4 unit, PUD, 1-unit condo, modular and prefabricated home financing Higher qualifying ratios allowing homebuyers to afford more Home must be located in a low-to-moderate income census tract in M&T Designated Areas or whose income is at or below 80% of the HUD Median Area Income in those areas For information on eligible LMI census tracts visit 14

15 M&Ts Loan Subsidy Program An Enhancement for Homebuyers Who qualifies for the Loan Subsidy Program? Qualification is based on the mortgage selected Advantages include reduced cash needed to close, credit flexibility and more affordable payments Borrower race / ethnicity is not considered Home Purchase Price: $275,000 Cash Needed to Close: Downpayment Closing Costs Up-Front Mtg Insurance Allowable Subsidy Amount Net Cash Needed to Close Required Reserves 30 Year Conv Mtg (w/o Subsidy) $8,250 $15,504 - N/A $23,754 Per AUS HomeReady with Subsidy $8,250 $15,471 - ($18,750) $4,971 Per AUS Min Credit Score Per AUS Per AUS 680 if subsidy is applied to downpayment Max DTI 45% 45% 45% FHA 30 Year with Subsidy $9,625 $11,212 $4,644 ($15,856) $9,625 Loan Amount $266,750 $266,750 $265,375 $4,644 MIP (Mtg. Ins. Premium) paid with subsidy funds Principal & Interest Taxes & Insurance Mortgage Insurance Monthly Payment New Jersey Home Purchase Loan Subsidy Example $1,274 $917 $311 $2,502 $1,217 $917 $256 $2,390 N/A 580 $1,173 $917 $186 $2,276 First-time Buyer Restriction? No No No Income Limits? No Yes No Interest Rate 4.00% 3.625% 3.375% LTV at Year % 96.25% 95.72% Principal Paid at Year 5 $1,935 $2,066 $2,146 Interest Paid at Year 5 $4,433 $4,017 $3,720 Homebuyer Ed Required? No Yes No 15 For illustrative purposes only. Example assumes annual property taxes and hazard insurance premium totaling $11,000. Not to be construed as a loan offer. The loan examples provided here are subject to change.

16 M&T s Loan Subsidy Program Qualifications Where must the home be located? The property must be located in an eligible county, as prescribed by the Consent Order, and be in a census tract that is >50% Black and/or Hispanic The eligibility of a specific property can be determined by visiting ffeic.gov/geocode to identify the property s census tract and determine if it s eligible (see appendix for details) Residents of majority Black and/or Hispanic census tracts in the Affected MSAs, buying or refinancing properties outside of those census tracts, are not eligible for assistance per the Consent Order Eligible Counties New Jersey, Pennsylvania and Delaware NEW CASTLE CTY, DE ELGIBLE COUNTY 16

17 Questions? Contact Information Lillian Hernandez, CRA Mortgage Manager Alle Ries, Regional CRA Officer