NEW CONSTRUCTION FINANCING PROGRAM

NEW CONSTRUCTION FINANCING PROGRAM Program Guide The is an Equal Housing Opportunity Lender

I. Program Purpose The New Construction Financing Program (the Program ) encourages WV licensed home builders and modular home dealerships ( Eligible Builders ) to build single-family homes for sale to the public at a price not to exceed the Fund s current Mortgage Revenue Bond Program house price limits (the MRB Limit ). The MRB Limit can be found on our website at www.wvhdf.com. The total price of the house, including all improvements, must not exceed the MRB Limit. The Program may provide financing for both land acquisition and construction. II. Eligible Builders Eligible Builders include licensed home builders and modular home dealerships. Applicants must be licensed by and in good standing with the State of West Virginia. All contractors and subcontractors must have the appropriate licensure and classification to build residential homes and must provide a copy of their contractor s license issued by the West Virginia Division of Labor - Contractor's Licensing Division. Applicants must also provide evidence of a Builders Risk Insurance Policy that includes property and liability coverage and Worker's Compensation and Unemployment coverage, if applicable. The Fund will verify the Applicant s status at http://www.workforcewv.org to ensure the Applicant is not in default with unemployment payments. Eligible Builders will have acceptable personal and business credit profiles, acceptable debt coverage ratios and may be asked to personally guarantee each loan. The property location, market and other appraisal review completed during underwriting and must be acceptable to the Fund. Initially, Eligible Builders are eligible for up to two Program loans. After Eligible Builder s initial loans are paid in full, the Eligible Builder may be permitted to apply for up to four (4) loans. No more than four (4) loans to one Eligible Builder will be allowed at any given time. Any loan default shall exclude Eligible Builder from future program participation. Applicant must comply with Fund s Multi-family Lending Policy which can be found at www.wvhdf.com. The Eligible Builders will be responsible for advertising and all other marketing of the spec home in order to pursue a timely sale. The Eligible Builders must provide the Fund with their marketing plan at the time of application and evidence throughout the loan term of compliance with the plan.

III. Loan Terms 1) The loan term will be 15 months. At its option, the Fund may extend the loan if circumstances so warrant. 2) The interest rate on the loan will be prime plus.5% or 1% as set forth below, and will be fixed for the term of the loan. if the appraised price is less than $200,000 the interest rate will be prime plus.5%. if the appraised price is equal to or greater than $200,000 the interest rate will be prime plus 1%. 3) All principal and interest are payable upon the earlier of sale of the property or loan maturity. 4) The loan may be prepaid at any time without penalty. 5) A non-refundable application fee of $500 is due with the Program application. 6) The Fund will require a first lien on the property and an assignment of the construction contract. 7) A financing fee of 1% of the loan amount is payable at loan closing. This fee may be included in the Program loan amount provided it does not cause the loan amount to exceed the 80% loan to value ratio. 8) The loan amount shall not exceed 80% of the preconstruction appraised value of the house as constructed, including any land cost. 9) Construction must not begin until after closing. 10) Eligible Builders must provide a 1 year builder s warranty. 11) A title insurance policy will be required in the amount of the program loan at closing.

IV. Lot Requirements Prior to any loan approval, a site review will be conducted by the Fund s Staff. This review will assess area conditions and any necessary site preparation, water, sewer, gas and electric hook-ups, and evaluate the location where the improvements will be placed on the lot. Consideration will be given to the appearance of surrounding properties and the affect of the location on the marketability of the completed home. Lots must meet the following requirements: 1) Must be graded to prevent ponding water and poor drainage. 2) The entire parcel must be located out of the 100-year flood plain. 3) Lots must have access to all utilities. Well water supply and septic disposal systems are acceptable. 4) Must not exceed 5 acres. 5) Must be properly zoned for single family residential housing if in a zoned area. 6) Must not have been raised with improper fill materials or uncontrolled fill. 7) Must be free from all encroachments, rights-of-way, easements, liens and other encumbrances not permitted by the Fund s single-family lending programs. 8) Access to the lot must be by an all-weather road passable for vehicles of all types during all seasons of the year with minimum base width of 9 0. This includes heavy rain and heavy snow. The road shall be positively crowned or sloped to prevent water ponding on the road surface. A road that floods or crosses a stream is not acceptable. 9) If the road is not publicly owned and maintained, an active Homeowners Association responsible for road maintenance or a valid road maintenance agreement signed by a majority of the property owners must be in place. 10) A Driveway Encroachment Permit is required by the WV Department of Transportation if a new driveway is being constructed to access a publicly owned road. Information regarding permits can be obtained at www.transportation.wv.gov.

V. House Requirements Homes financed by the Program must be designed and constructed to meet all applicable current State and local building and fire codes. All work must be completed per the approved plans and specifications with all applicable permits. If located within a subdivision, the lot and the home must comply with subdivision and covenant restrictions. No changes to the house plans or specifications can be made after closing without prior written approval by the Fund. VI. Inspections The Fund will monitor construction progress, compliance with plans and specs, and quality of workmanship by conducting on-site inspections of the home throughout the construction period. All inspections will be coordinated by the Fund and performed by Fund staff. Inspection requests must be submitted electronically by e-mail on the required forms. Any inspection request that is made when the work is not complete for that particular stage will result in payment delays and a re-inspection fee of $150. The Eligible Builder will be responsible for coordinating inspections with the local code compliance enforcement officers in areas with active code enforcement to obtain all other local approvals.

VII. Disbursement and Construction Draw Schedule Options Draw Schedule Land Acquisition and Construction of Stick Built Home Land Acquisition and Modular Home Closing Disbursement for land acquisition, if applicable, will be made at the time of closing and will be subject to 5% retainage Disbursement for land acquisition, if applicable, will be made at the time of closing and will be subject to 5% retainage First Draw Second Draw Third and Final Draw Disbursed after the footer /foundation inspection After the open wall inspection. After the final inspection of the home. During this final inspection, the house must be 100% complete. Disbursed when the unit is ordered. After the footer/foundation inspection After the unit is set and dried in. The fourth and final draw will be during the final inspection. All disbursements and draws will be subject to a 5% retainage, which will be held until the Fund agrees that retainage can be released after the final inspection/draw. Complete draw requests will be processed within ten (10) business days from receipt. The second, third and fourth draws must include a waiver of liens form signed by all contractors, subcontractors and/or vendors requesting payment from that particular draw. The last draw will require a notarized Affidavit of Payment and Release of Liens from the builder stating all vendors and subcontractors if applicable, have been paid in full. A Certificate of Occupancy will be required upon completion if mandated by local authority.

VIII. Disclaimers Deviations from Program requirements are subject to Board approval. The Fund reserves the right to share Program Loan information with other entities providing funding to the same project. The Fund reserves the right to accept or reject any application. The applicant shall not discriminate on the basis of race, religion, color, national origin, sex, disability, familial status or any other basis prohibited by law in the sale or lease or other use or disposition of the property or related facilities covered by funding provided by or through the Fund. In addition, discrimination against any employee or applicant for employment on the basis of race, religion, color, national origin, sex, disability, age (40 and above) or any other basis prohibited by law will not be permitted by a contractor or subcontractor engaged to perform any work on any project financed by or through the Fund. Program requirements may be changed by the Fund without notice. Other requirements and/or limitations may apply. Application Period Program applications are accepted at any time. However, funds are limited and the Program may be withdrawn by the Fund at any time. Funds are reserved for projects on a first come first served basis. No funds will be reserved until a complete Application is received. Please see the Application and list of documents required. The Fund will honor all outstanding commitments if the Program is withdrawn.

To apply, contact the appropriate Area Manager for your County as listed below.

EXHIBIT A NEW CONSTRUCTION FINANCING PROGRAM APPLICATION Name of Applicant: Address: City: County: State: Zip: Contractor s License #: Office Phone and Fax #: Cell Phone #: Email Address: Contact Individual(s): PROPOSAL DESCRIPTION Property Address: Size of Parcel: (acres/sq. ft.) City: County: State: Zip: Land Control: Do you own the land? Yes No Original Land Purchase Price $ Year Purchased Current Land Value $ OR Is the land under contract or option? Yes No Contract or Purchase Price $ Listed Price Number of homes you intend to construct on this parcel: Type of construction: Stick Built Modular

Construction Cost of Home $ Square Foot Size of Home Total Cost of Project $ Anticipated Sales Price of the Home $ Describe your marketing strategy for the homes you intend to construct: Timing Activity Budget Applicant will be responsible for procuring, all permits and licenses required on the project and for paying any and all fees or assessments which are or may be required to build the home. Copies of these documents are to be submitted to the Fund prior to loan closing and the start of construction. I hereby certify that I have read the New Construction Program Financing Guide and understand the New Construction Financing Program requirements, and that all homes must be built in accordance with the plans and specifications attached hereto and the codes and regulations described in the New Construction Financing Program Guide. Signature of Applicant Date

EXHIBIT B DOCUMENT CHECKLIST DOCUMENT CHECKLIST Applicant submits with application Application 1. Application Fee of $500 2. Copy of Driver s License 3. Authorization to Release Information 4. Personal Financial Statement dated within a year from the date submitted to the Fund. 5. 3 years personal tax returns dated within a year from the date submitted to the Fund. 6. 3 years business tax returns with all schedules and pages, signed and dated (must include income statement, statement of cash flows and balance sheet) dated within a year from the date submitted to the Fund. 7. Itemized list of debt service and terms for the company dated within a year from the date submitted to the Fund. 8. Organizational Documents 9. Copy of Current West Virginia Contractor s License 10. Declaration page evidencing worker s compensation coverage if applicable or letter of exemption 11. Copy of current resume or experience and references 12. Marketing material: A full description of marketing plans, sample advertisement, sales price expectations, competing properties in the area, contact information for sales representatives 13. Site location map CLEARLY locating the site

14. Copy of the recorded property deed (must include property description), purchase agreement or option to purchase 15. Copy of the most recent property tax bill/receipt 16. Copy of title opinion or title insurance (if applicable) 17. Copy of Deed of Trust (if applicable) 18. Site Plan for proposed home showing proposed site drainage detail and 100-year flood elevation after home is built (2 sets required) 19. Evidence that all public utilities and telephone service is available: Water, Sewage, Electric, Gas, and Telephone 19a. If no public water and sewage is available submit the following: Water well supply approval permit from appropriate local authority Septic disposal system approval permit from appropriate local authority 20. Subdivision restrictive covenants (if applicable) 21. Road maintenance agreement if road is not publicly maintained 22. Survey by a Licensed Surveyor that shows: 1. Meets and bounds/boundary lines 2. House setback lines 3. Existing and proposed drainage detail and slopes 4. Legal description 5. Floodplain information to include 100 year flood elevation after the home is built 6. Site Plan of the proposed home 23. House/floor plans, 2 sets required (electronic plans are acceptable) 24. Specifications/description of materials (HUD Form 92005 [10/84] or equivalent RD Form 1924-2 may be used), 2 sets required 25. Itemized construction budget (Prefer HUD Form 92326 Project Cost Estimate) 26. Acknowledgement of any pre-paid construction costs, along with receipts

1. Building permits Applicant submits after approval and before construction begins 2. Driveway encroachment permit from WVDOH (if applicable), septic approval, water well permit 3. Builders Risk Insurance Policy that includes property and liability coverage 4. Pre-Construction or as complete Appraisal (ordered by WVHDF). 5. Certification of Appraised value (ordered by WVHDF) How is this different than the above appraisal? Are you saying you want an appraisal before and after the construction? 6. Final Electrical Inspection 7. The Fund s Final Inspection Report and Approval (completed by WVHDF) 8. Local Government Final Inspection and/or Certificate of Occupancy Defer to legal for complete list Closing Documents

EXHIBIT C AUTHORIZATION TO RELEASE INFORMATION Project/Property Name: Project/Property Address: To Whom It May Concern: has/have applied for a Loan from the (the Fund ). As part of the application process the Fund may verify information contained in the loan application and in other documents required in connection with the loan, either before the loan is closed or as part of its quality control program. The undersigned authorizes you to provide to the Fund any and all information and documentation that it requests regarding the undersigned entities and/or individuals. Such information includes, but is not limited to, employment history and income; bank, money market, and similar account balance(s); credit history; and copies of income tax returns. The Fund may address this authorization to any party named in the loan application. A copy of this authorization may be accepted as an original. Signature Date Printed Name Social Security Number Business Name (if Borrower is a business) By: Title: FEIN Date

EXHIBIT D CONSTRUCTION AGREEMENT Legal Department will need to prepare

EXHIBIT E LEGAL DESCRIPTION OF PROPERTY

EXHIBIT F DWELLING PLANS AND SPECIFICATIONS Please insert the Dwelling Plans (HUD Form 92005 or equivalent RD 1924-2 Form), and a complete set of construction drawings, site grading and drainage plans.

EXHIBIT G CONSTRUCTION BUDGET

EXHIBIT G CONSTRUCTION BUDGET (CONTINUED)

EXHIBIT H REQUEST FOR DISBURSEMENT/DRAW FORM

EXHIBIT I MARKETING PLAN

EXHIBIT J CLOSING DOCUMENTS Legal Department will need to prepare

EXHIBIT K BUILDER S WARRANTY & CERTIFICATE Name and Address of Property Owner: (Location of Property): 5710 MacCorkle Avenue, SE Charleston, WV 25304 For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the undersigned Warrantor hereby warrants and certifies to the Owner identified above and to their successors or transferees, all of whom are hereinafter referred to as Owner, that: The structure and improvements, including appurtenances, located on the property identified above (the Home ) is constructed or improved in substantial conformity with the drawings and specifications, and any applicable INTERNATIONAL RESIDENTIAL CODES, LOCAL CODES AND ORDINANCES, State health and environmental laws and regulations and applicable subdivision requirements. The Home has been inspected by our trained personnel and, where required, by the building department of the area in which it is situated. This Warranty applies to all workmanship, materials, and the installation of systems and equipment (including, but not limited to, the heating system, water heater, ranges and refrigerator, plumbing, electrical, and septic system if installed). The Owner shall give written notice to the Warrantor, at the address given below, promptly after the discovery of any defective condition in the Home. Such written notice must be given to the Warrantor during the period of Warranty. THE PERIOD OF WARRANTY SHALL BE ONE YEAR FROM THE DATE OF INITIAL PURCHASE OF THE COMPLETED HOME BY THE OWNER. THIS WARRANTY SHALL BE EXTENDED FOR AN ADDITIONAL ONE- YEAR PERIOD FROM THE DATE THE HOME IS SOLD BY THE OWNER TO A THIRD PARTY, PROVIDED, HOWEVER, IN NO EVENT SHALL THE WARRANTY EXCEED TWO YEARS FROM THE DATE THE HOME IS SOLD TO THE OWNER. It is agreed and understood that this Warranty shall apply only to those defective conditions of which the Warrantor has been given written notice during the initial period of Warranty and any extension period of Warranty.

Warrantor further agrees that it will take all necessary actions to correct such defective conditions within thirty (30) days of receipt of written notice. If such action is not taken within thirty days, the Owner may, at its option, contract with another party for the correction of the defects. If said defects constitute an emergency and Warrantor has received notice of said emergency and does not resolve said condition(s) within 48 hours of receipt of said notice of emergency, then the Owner may, at its option, contract with another party for the correction of the defects. Warrantor agrees to pay all expenses incurred by the Owner to correct defects covered by this Warranty. This Warranty shall be in addition to, and in no way reduce, all other rights and privileges that the Owner may have in law or in equity or under any other instrument, and shall be binding on the Warrantor, its permitted successors and assigns notwithstanding any provision to the contrary contained in the contract of purchase or any other instrument executed by the Owner. This Warranty is executed, in part, for the purpose of inducing the Owner to purchase the Home, and is assignable by and enforceable by the Owner. In the case of a sale of the Home by the Owner to a third party, this Warranty will extend to the third party occupants of the Home and their successors or transferees as provided above. Failure of the Warrantor to comply with the provisions of this Warranty may result in Warrantor s suspension and disqualification from future participation in any program administered by or through the Owner, as well as allow the Owner to seek full remedies against the Warrantor. If this is signed by anyone other than the Warrantor, the person signing for the Warrantor represents and certifies that he is authorized to execute same by the Warrantor and by his signature the Warrantor is bound under the terms and conditions of this Warranty. IN WITNESS WHEREOF, the Warrantor has signed this Warranty this of,. day Warrantor s Signature and Title (SEAL) Warrantor s Address Warrantor s Contractor s License Number Date: