FNMA Homestyle Steps to Success

Transcription

1 FNMA Homestyle Steps to Success Disclosing the Loan estimate for a FNMA Homestyle Loan Broker to provide the following: 1003 Signed by LO dated within 24 hours Completed Norcom LE Worksheet Copy of Credit Report (if locked at time of submission) Completed Estimated Homestyle Renovation Maximum Mortgage Worksheet (See Below) The HUD Consultant Fee must be disclosed on initial LE. The following costs must be provided on the estimated Homestyle Renovation MMWS: Section A Line 1,2,3 of MMWS Loan Parameters Section B Line 1or2, 3 of MMWS Property Information Section C Line 1 & 2 of MMWS Alterations, Improvements, and Repairs o Line A Hard Costs (Labor / Materials) o Line B Contingency Reserve Norcom requires this to be 15% of Line A o Line D Consultant Fees Norcom requires a HUD Consultant on all Homestyle Renovation loans UNLESS repair is NON STRUCTURAL, repairs are $10,000 or less in total, and project has no more than 3 contractors. o Line E Inspections Inspection fees $185 per Inspection Maximum of 5 Inspections. o Line F Title Updates Updates are $150 per Update Number or Title Updates MUST match number of inspections. IE: Disclosing 3 Inspection therefore we will disclose 3 title updates. o Line G Permits Included on MMWS o Line I Lender Draw Fee Norcom Lender Draw fee is $500 on ALL Homestyle Renovation Loans Section D Lines 1 thru 5 (as applicable) Loan Amount

2 Be sure to review the purchase contract for the following items The sales contract should be contingent upon approval The seller should allow inspectors, contractors, or the FHA consultant access to the property to estimate the cost of the remodel/renovation Within 7 to 10 days of the agreement, the buyer should obtain an inspection of the property by a professional home inspector and termite company to make sure there are not unforeseen problems FNMA Homestyle Renovation Loan Forms REQUIRED at time of SUBMISSION Homestyle Renovation Max Mortgage Worksheet Sections A thru D completed See Above FNMA Homestyle Renovation Borrower Acknowledgement (Form 2600) Signed and Dated by LO and Borrowers. Homestyle Homeowner/Contactor Agreement Completed and Signed by Borrower & Contractor. Homestyle Renovation Consumer Tips Signed by Borrower & LO HUD Consultant Work Write-up - Only required if HUD consultant is needed Contractor Docs Must be completed for each contractor Self Help is not allowed - See Below: o Contractor License If required by State or Municipality. If license not required then need 3 extra client references. o Work Write Up and estimate of work to be performed o General Liability Insurance (Min. of 500K) o Contractor Resume Fully completed with 3 residential references PLEASE NOTE: If these forms are not provided and completed and signed at time of submission your file will NOT be forwarded to underwriting until they are received.

3 Maximum LTV: 95% 95% 95% 85% 85% 85% 75% 75% 75% 90% 90% 90% 85% 85% 85%

4 Maximum Loan Amount: Follow FNMA Loan Limits The maximum loan amount includes any financed rehab amount. The rehab costs may not exceed 50% of the As Completed Value of the property. Calculating Maximum Loan Amount: Purchase The LESSER of: o As Completed value X maximum LTV o Purchase Price + Total Rehab Costs X maximum LTV Limited Cash-out Refinance o As Completed Value X maximum LTV o Customer may NOT get back the lesser of 2% or $2000 Purchase Example SFR- Max LTV 95% Purchase Price: $100,000 Total Cost of Renovation: $35,000 As-Completed Value: $150,000 LTV Calculation Lesser of: $150,000 x 95%= $142,500 $100,000 + $35,000= $135,000 $135,000 x 95%= $128,250 Refinance Example SFR Max LTV 95% Current payoff: $75, Cost of Renovation: $25, Closing Cost/Prepaids: $7, As-Completed Value: $160, LTV Calculation: $160,000 X 95% = $152,000 This is the Max loan amount, if the 1003 shows cash back to borrower, the loan amount must be reduced.

5 Eligible and Ineligible Properties and Programs: Refer to FNMA Standard product. In addition, the following also applies: Condominiums and PUD s must be FNMA eligible. For condominiums, interior rehabilitation is permitted only (no common areas). Multi-family conversions are not eligible for increase or decrease in unit count. Cooperatives and 2-4 unit Investment properties are not eligible. Mixed-use properties are not eligible. New construction is not allowed. The borrower must have a certificate of occupancy for a minimum of one year. EEM (Energy Efficient Mortgages) are not permitted. Eligible Improvements: FNMA does not specify which improvements may or may not be financed. Borrower can use funds for any repairs or renovations as long as the improvements are permanently affixed to the property and add value. Suggested Improvements: Structural alterations, additions and repairs. Remodeling kitchens and baths. Changes for aesthetic appeal and to reduce maintenance. Repair or replace plumbing, heating, AC and electrical systems. Install or repair well or septic system. (must be installed/repaired prior to beginning any other repairs) Roofing, gutters, downspouts. Interior and exterior painting (supplies must be included in bid). Replacement of flooring, carpeting and tile. New Swimming pool or deck Energy efficient improvements. Major landscape work and site improvement. Improvements for easier accessibility to the handicapped. Kitchen appliances (supplies must be in bid, see product guidelines for addl. Information on permitted appliances).

6 Eligible and Ineligible Properties and Programs: Refer to FNMA Standard product. In addition, the following also applies: Condominiums and PUD s must be FNMA eligible. For condominiums, interior rehabilitation is permitted only (no common areas). Multi-family conversions are not eligible for increase or decrease in unit count. Cooperatives and 2-4 unit Investment properties are not eligible. Mixed-use properties are not eligible. New construction is not allowed. The borrower must have a certificate of occupancy for a minimum of one year. EEM (Energy Efficient Mortgages) are not permitted. Eligible Improvements: FNMA does not specify which improvements may or may not be financed. Borrower can use funds for any repairs or renovations as long as the improvements are permanently affixed to the property and add value. Suggested Improvements: Structural alterations, additions and repairs. Remodeling kitchens and baths. Changes for aesthetic appeal and to reduce maintenance. Repair or replace plumbing, heating, AC and electrical systems. Install or repair well or septic system. (must be installed/repaired prior to beginning any other repairs) Roofing, gutters, downspouts. Interior and exterior painting (supplies must be included in bid). Replacement of flooring, carpeting and tile. New Swimming pool or deck Energy efficient improvements. Major landscape work and site improvement. Improvements for easier accessibility to the handicapped. Kitchen appliances (supplies must be in bid, see product guidelines for addl. Information on permitted appliances).

7 Rehab Period: Work expected to start immediately after closing FNMA DOES NOT allow for release of up front funds on the Homestyle Product NO DRAW AT CLOSING. Rehab time frame must be realistic; a start and end time must be stated by contractor. Maximum 6 months rehab time. Any changes to work being performed need to be approved prior to the work being done. Borrower can finance up to 6 months of PITI payments if the home is uninhabitable (Must be included on MMWS Section C Line H) Instruct the borrower to hold off on starting any new projects until the work they contracted for the Homestyle loan is complete and inspected. Checks will be payable to the borrower and the contactor for work already completed. There is a 10% holdback until all work is finished Underwriting with DU: All Applications to be run thru DU and receive an Approve/Eligible 620 Min. FICO Required DU Identifies Homestyle Renovation mortgages based on entry of a dollar amount in the details of transaction, Section VII, Line B, when purchase or refinance is selected in Section II. Mortgage Insurance: Mortgage Insurance is required for all loans with LTV s in excess of 80%. The following companies are eligible to be used: o Radian o Arch o Essent o Genworth o MGIC o National MI Standard FNMA Coverage is required Lender Paid MI is available normal price adjustments apply Broker can select which MI company is used by pricing out the MI thru the price engine and printing your MI quote. MI Quote must be included with file submission to be honored.