RENOVATION LENDING What you need to know and why Brad Smith National Renovation Sales Specialist
BEFORE & AFTER Before After Before After 2
WHY??? The Multiplier Effect. Buyers Agents Listing Agents Existing Home Owners Refi ( don t move, IMPROVE! ) Contractors Sub Contractors Specialty Vendors: Solar panels Storm Shutters HVAC heating and air-condition Custom Windows and Doors Big Box Company contractors Flooring and Tile companies Pool Companies Land scape architects Custom patios Outdoor Kitchens Outdoor Fire Pits Generator Insurance Agents 3
QUICK REFERENCE GUIDE
QUICK REFERENCE GUIDE
FHA 203K Eligible Repairs The types of improvements that borrowers may make using Section 203(k) financing include: structural alterations and reconstruction modernization and improvements to the home's function elimination of health and safety hazards changes that improve appearance and eliminate obsolescence reconditioning or replacing plumbing; installing a well and/or septic system adding or replacing roofing, gutters, and downspouts adding or replacing floors and/or floor treatments major landscape work and site improvements enhancing accessibility for a disabled person making energy conservation improvements they can also cover the conversion of a property of any size to a one- to four- unit structure. Check the county loan limits for 2-4 unit properties!!! https://entp.hud.gov/idapp/html/hicost1.cfm NAPLES-IMMOKALEE-MARCO ISLAND, FL34940 COLLIER 021 FL : $448,500 $574,150 $694,000 $862,500 One-family - $625,500.00/HB $271.050.00 - Standard Two-family - $800,775.00/HB $347,000.00 - Standard Three-family - $967,950.00/HB $419,425.00 - Standard Four-family - $1,202,925.00/HB $521,250.00 - Standard 7
MARKETING MATERIAL 8
ELIGIBLE REPAIRS Home Style renovation allows for structural, non-structural and cosmetic repairs. Repairs must add value to the property and be permanently affixed. Eligible repairs include but are not limited to: Major structural alterations and additions Major landscaping and site improvements Swimming pool repair or addition Remodeling of rooms, including kitchens and bathrooms Relocation of load bearing walls Construction or rehabilitation of attached outbuilding structures (i.e. attached pool house or attached garage) Basement finishing or waterproofing Well/septic addition or repair Handicapped retrofitting 9
ELIGIBLE LUXURY REPAIRS Luxury items are eligible on HomeStyle (must be permanently affixed) Barbeque pits, outdoor fireplaces Built in spa/sauna In-ground swimming pool installation or repairs Tennis courts Generator Solar Panels Storm Shutters 10
RENOVATION DREAM TEAM The Total Package HUD Consultant Real Estate Agent Contractor(s) Present to Large Audiences Real Estate Offices Homebuyer Seminars Home Shows Tradeshows 11
CERTIFIED HUD CONSULTANTS Adds an extra layer of protection for both the lender and borrower by evaluating the merit of the offers submitted by GCs, assists throughout the construction process, and verifies all work is satisfactorily completed. Consultant fees range from $400-$1,000 depending on the dollar amount of the estimated work. HUD Consultants can be found: Look Up Link https://entp.hud.gov/idapp/html/f17cnsltdata.cfm 12
HUD CONSULTANT ROLE Required when total rehab costs exceed $15,000 or per HomeBridge Approved HUD Consultant required to prepare Feasibility Study in two instances: When total rehabilitation costs exceed $15,000 or At the requirement of HomeBridge Renovation Concierge Department Consultant works for HomeBridge but is selected by the Borrower HUD Consultant manages the draw process: Provides Feasibility Study (Work Write-Up not required on HomeStyle) Provides a draw schedule/performs inspections to approve disbursements Provides recommendation for Contingency Reserve amount to be established (final amount set by HomeBridge Renovation Concierge Department) HUD Approved Consultant Search: Find a HUD Consultant Certain areas may not offer HUD Approved Consultants; if necessary, HomeBridge RCD can review and approve use of independent 3 rd party inspection company 13
WHAT S NEXT? 1. Borrower is pre-qualified One simple FHA or FNMA loan with a construction rider 2. Agent locates new dream home Not the perfect house but in the perfect LOCATION! 3. HUD Consultant performs Feasibility Study The list of NEEDS 4. Contractor completes bid/sow scope of work The list of WANTS 5. HUD Consultant completes WWU work write up/sor Customized dream home 14
DU Specifics Total renovation costs* must be added to the Details of Transaction> Alterations> Line B: Total Renovation Costs Include: Labor and materials Contingency Reserve Inspections Up to 6 months PITI owner occupied with HUD Consultant approval Discount Points Renovation fees as applicable (Feasibility Study fee, appraisal, architectural/engineering fees, permits) 15
APPRAISAL ISSUES Appraisal based on the after-improved value No need for an as-is value No fear of a low appraised value Never hear, It failed the home inspection This is the list of NEEDS renovation loan! 16
Appraisal Report Sample Reconciliation Section: Subject To The value in the Reconciliation section is the After- Improved value on HomeStyle transactions 17
OFFER IT TO They are KEY to long-term homeownership expansion! Still desire homeownership 75% believe homeownership is an important long-term goal Buyers expect to live in a home for 12 years 2007 expectation was 6 years 53% of buyers said finding the right home was the most difficult step in the homebuying process Notice, it was not securing the mortgage Location, location, location Overall value and enjoyment 18
64.2% OF MILLENNIALS Put Down Less Than 20% 19
OFFER IT TO 57 million Americans, or 18% of the population, live in a multigenerational family household Retro-fitting homes for disabilities and special needs 203(k) and HomeStyle eligible Build relationships with Elder Care Attorneys 20
NDC - EXPANDED Effectively immediately, we are expanding the Non Delegated Correspondent option to allow for the following products: Jumbo and 203(k) Standard and Limited. With this change, we are offering the following product types for NDC: Conventional (FNMA, FHLMC) FNMA HomeStyle FHA including 203(k) Standard and Limited VA USDA Jumbo 21
SUBMISSION ENHANCEMENTS Reduced Disclosure Requirements For 203(k) Standard and Limited and HomeStyle All renovation-specific disclosures will be moved to recommended but not required at submission Renovation disclosures can be conditioned for on the loan approval and are no longer required to move a file to Underwriting 22
SUBMISSION ENHANCEMENTS Reduced Submission Requirements for HomeStyle Loans Only a contractor bid or feasibility study are required, not both The file can move to Underwriting with just one of the above, and the underwriter will condition for the missing item 23
SUBMISSION ENHANCEMENTS Reduced Submission Requirements for Standard 203(k) Only a contractor bid or work write-up are required, not both The file can move to Underwriting with just one of the above and the underwriter will condition for the missing item 24
SUBMISSION ENHANCEMENTS Reduced Signature Requirements for HomeStyle/203(k) Bids, Work Write-ups and Feasibility Studies Contractor bids, Work Write-Ups and/or Feasibility Studies no longer require fully executed copies to move to Underwriting Required party signatures/initials can be conditioned for in Underwriting as necessary 25
LE Guidance 26
SUBMISSION FORMS 27
SUBMISSION FORMS 28
SUBMISSION FORMS 29
RCD the ACE In The Hole!!! renovation@homebridge.com Team work makes the dream work RCD related items are completed Jacqueline Van Winter, Assistant Renovation Concierge HomeBridge Financial Services, Inc. 116 Defense Highway Ste 304 Annapolis, MD 21401 o: 443-333-8800 X202 f: 410-510-1301 e: jmarshall@homebridge.com To: Steven Marshall Subject: 203k Hey Steve, nice chat. here is my info- look forward to meeting RCD staff. -- Lee Senior Loan Officer renovation@homebridge.com 30
BROKER TESTIMONIAL Susan, Brad, Keky, Chris and Roberto, I wanted to take a minute to tell you all how impressed I am with your service. You made us look like a rock star on this transaction! As we learn more about your system and what you look for, we hope to show you the same level of professionalism on our end. I can assure you that we will be doing a lot of business together here real soon. Thank you! Andy HUD Certified FHA 203k Instructor State Licensed for Continuing Education 22 Years Experience in FHA, 203k, VA, Conventional, Fannie Mae and USDA Over 5200 FHA 203k and Fannie Mae Renovation Loans closed, managed and funded since 1993 31
BROKER TESTIMONIAL Hi All! I just wanted to say thank you for moving so quickly to get this approved for us. I am meeting with the borrowers tonight to go over and obtain the remaining conditions we need from them. Thanks!! Ken 32
CTC IN 13 DAYS Thank you for going above and beyond on this Home Style Renovation Loan and helping me meet a totally unrealistic settlement date. We were more than successful by not only taking this loan from Setup to CTC in 13 business days but also had it CTC 2-1/2 days prior to the closing date of July 24 th. Thank you for helping me gain a few new raving fans! Make it a wonderful day! Sherry 33
Brad Smith National Renovation Sales Specialist NMLS #250333 727-580-9414 bsmith@homebridge.com www.homebridgewholesale.com 34