Plaza s VA Renovation

Transcription

1 Click here to add a longer headline about the slide Plaza s VA Renovation July 2018

2 Your GoToWebinar Toolbar Use speakers or a telephone to listen to the audio. Use the information in your toolbar to dial in from your telephone. Click here to download any handouts. If you have any questions, please type them in here. All questions will be addressed, time permitting. 2

3 Legal Disclaimers This information is published and/or provided by Plaza Home Mortgage, Inc. as a courtesy to its clients and is meant for instructional purposes only. It is not intended for consumer use. None of the information provided is intended to be legal advice in any context. Plaza makes every effort to provide accurate information. Plaza does not guarantee, warrant, ensure or promise that it is correct; and any effort to blame Plaza if this information proves to be incorrect will be vigorously defended. All ideas expressed during this event are those of the individuals making them and are not to be imparted to the organizations they represent. Any unauthorized use, dissemination or distribution of these documents or ideas is strictly prohibited. Please visit our website at to view full program guidelines. The information contained in this webinar may not highlight all requirements of these programs and does not reduce or eliminate any requirements set forth in our guidelines. Guidelines are subject to change without notice. Plaza Home Mortgage, Inc. is an Equal Housing Opportunity Lender. This is not a commitment to lend. Information is intended for mortgage professionals only and not intended for public use or distribution. Terms and conditions of programs are subject to change at any time. Refer to Plaza s underwriting and program guidelines for loan specific details and all eligibility requirements Plaza Home Mortgage, Inc. All rights reserved. Company NMLS #

4 Objectives This training session is for Wholesale, Mini-Correspondent and National Correspondent Loan Origination Partners. The webinar is scheduled for 60 minutes. The goal of this webinar is to show you how Plaza s VA Renovation Program can help make the dream of homeownership possible for more veterans. 4

5 Presenter Ragen Cunningham National Renovation Lending Manager 5

6 What is a VA Renovation Loan? The VA Renovation loan, valid for purchases or refinances, allows VA-qualified borrowers to easily fund the cost of a purchase or re-fi and include the costs of renovations, up to $50,000, into a single loan. A more affordable option compared to adding a second mortgage or HELOC. Both Purchases and Refinances allow borrowers to borrow up to 100% of the after improved value. 6

7 Key Advantages of Plaza s VA Renovation Loan Up to $50,000 in additional financing toward renovation costs is included in the VA financing. Allows luxury improvements (pools, outdoor living). Both purchases and refinances allow borrowers to borrow up to 100% of the after improved value. Like typical VA loans, originators will receive compensation when the loan is closed and before construction has begun. Our seasoned Renovation Specialists are experts in the field, and know the in s and out s of renovation loans. 7

8 Opportunity 100 Financing No MI 2.1M Active Veteran Loans 19,349,382 Total US Vets Total Active VA Loans *National Center of Veteran Analysis and Statistics,

9 Click here to add a longer headline about the slide VA Renovation Guidelines

10 Qualification Guidelines 620 Min Credit Score- Conforming 10

11 Borrower Eligibility Active duty service members Reserve and National Guard members Unmarried surviving spouse Honorably discharged Veterans 11

12 Eligible Properties Attached/Detached SFRs and PUDs VA approved Condos interior unit upgrades only 2-4 Units Owner Occupied Only 12

13 Ineligible Properties x Mixed use properties in commercial zoning x Non-VA approved or warrantable condos x Timeshares x Working farms, ranches, orchards x Commercial properties x Cooperatives x Condotels x Properties listed on the National Historic Register x Geothermal homes x Manufactured housing or mobile homes x Homes that have been completely demolished, including the foundation x Homes being moved from one location to another x Refinance transactions for properties listed for sale on or after the date of application 13

14 How to Calculate Loan Amount Loan-to-value is based on: Purchase: is the lessor of the sales price plus repairs OR the as completed NOV appraised value Refinance: 100% of as completed NOV appraised value Base loan amount cannot exceed 100% LTV/CLTV 14

15 Let s look at a Purchase example: LTV 100% Purchase/Renovation Costs Sales Price $220, Labor/Materials 30, Soft Costs (permits, etc.) % Contingency 3, *Inspection fees (max 3 draws) Total $254, As Completed NOV appraised value 280, % of As Completed NOV appraised value 280, $254,964 < 280,000 Maximum Loan Amount $254,

16 Timing and Occupancy Construction must BEGIN within 30 days of closing. All rehabilitation must be completed within 4 months of closing. The borrower cannot be displaced from the property (for more than 15 days). Examples of work that may cause them to be displaced: Properties that will not have running water plumbing repairs that would require the water to be shut off for long periods of time No electricity electrical repairs that would require the electricity to be shut off for long periods of time Missing roof No heat source 16

17 Purchase Contracts Quick Tips: Have accessibility to the property for contractors, inspectors, architects/engineers, and appraisers. Make sure power/water, utilities are on at time of appraisal inspection to avoid increased contingencies. 17

18 Allowable Renovation Costs Actual cost of the renovation based on plans, specifications and accepted contractor s contract stating scope of work, cost of materials and labor, timeframe for start, and completion of work. Contingency Reserve is required equal to 10% to 15% Allowable construction related fees and costs Inspection/Title Update Fees Permits and Other Fees Discount Points on Repair Costs 18

19 Non-Allowable Renovation Costs x HUD Consultant x Architect x Engineer 19

20 Fund Definitions Contingency Fund 10% of the actual repair amount (and 15% maximum) will be held in the repair escrow account. This reserve of funds is for the purpose of covering unplanned repairs that become necessary due to health or safety issues. No portion of this money may be used for building material changes or repairs. This contingency fund is always capped at 15%. If utilities are off at the time of appraisal inspection, a minimum 15% contingency reserve is required. Any unused funds are returned as a principal reduction and do not affect payment. Borrower Funded Contingency Alternatively, the contingency can be funded with the borrower s own funds and not be financed. The funds must be provided at escrow from a documented source (not borrowed or financed). If not required for repairs, the funds would be returned to borrower at completion of the renovation and at final closeout. NOTE: VA Renovation Refinance only - borrower may request the remaining financed contingency reserves returned as part of final close out OR applied to the principal balance of the loan. The option to refund excess financed contingency funds at completion is not allowed in Texas. 20

21 Fund Definitions (cont d) Holdback Fund 10% of the total draw request amount will be deducted and held in the repair escrow account until the entire project is complete. For example, if $1,000 draw is requested, Plaza Home Mortgage will issue a check for $900. The $100 difference will remain in the repair escrow account. All monies held back will be released after all work is complete and Plaza Home Mortgage has confirmed that the property s title is clear of any liens. 21

22 VA Renovation Draw Process No more than 3 draws allowed, 2 interim draws performed by a construction inspector and a final performed by VA appraiser. Funds will be made available via 2-party check payable to borrower and contractor. Plaza should release monies within 5 business days of receipt of a properly executed VA Renovation Draw Request. No draw at closing allowed. 22

23 Eligible Improvements All alterations and repairs must be permanently affixed to the property (dwelling or land) and be ordinarily found on similar properties of comparable value in the community. Project must be complete with final inspection no later than 120 days from note date. The maximum renovation amount, including fees and contingency, must not exceed $50,000. There is no minimum dollar amount for repairs. 23

24 Eligible Improvements (cont d) Repairs should be non-structural, although minor structural repairs are allowed. Any work that requires structural engineering reports or architectural specs is not allowed. If any structural work is included, building/construction jurisdictional evidence that project does not require engineer reports or architectural specs must be provided, e.g. local code pertaining to type of structural repair, permits and/or other written verification from the jurisdiction (state, city, municipality or county). Minor structural repairs must be those that can reasonably be expected to be completed within the 120-day time frame. If structural repairs are included, the contractor s bid must include a statement addressing the fact that all structural repairs do not require engineering or architecture reports to obtain permits or meet local building codes and that such work will be completed within 120 days. 24

25 Ineligible Improvements Any work that cannot be completed within 120 days of note date. Major structural repairs, rehab or improvements such as load bearing walls, foundation repair or support joists. Improvements or changes that were not approved prior to the start of work. Materials or work performed prior to the first draw disbursement. Any improvement that does not become a permanent part of the subject property. 25

26 Borrower Provided Materials Materials provided by the borrower may be allowed but cannot be financed in the loan amount. All materials provided by the borrower must be new from the manufacturer and be documented with paid invoices, and Source of funds to acquire the materials must be documented Borrower provided materials must be documented on the contractor s bid as borrower provided materials (zero cost) labor must be provided by the contractor. 26

27 Click here to add a longer headline about the slide Underwriting

28 Underwriting Loans must be submitted to DU or LPA. Loans not receiving a DU or LPA approval may be manually underwritten if: Loan meets all published loan program guidelines AND Underwriter s evaluation has determined loan is an investment quality mortgage AND Loan file contains documentation to support underwriting decision. 28

29 Income and Employment All VA loans must be fully documented. Refer to the VA Lenders Handbook for more details. A verbal VOE is required for all borrowers. All transactions require a signed and dated IRS Form 4506-T for all borrowers completed prior to closing. Refer to Plaza s Tax Transcript Guidelines to determine if transcripts are required. 29

30 TRID Fees 1 x $200 30

31 VA Appraisal Fee Schedules and Timeliness Requirements Click the VA Regional Loan Center link On the US map, click a state to obtain the supporting Regional Loan Center for that state, where you can obtain maximum allowable fees for the appraisal type and number of days allowed for completion. If you hover your mouse over a state without clicking, you will see all of the states supported by that particular Regional Loan Center. VA will set the fees for the appraisal and final inspection 1004D cost. 31

32 VA Renovation: 1, 2, 3 Forms Contractor Approval Bid Approval 32

33 Forms Click here to add a longer headline about the slide

34 VA Renovation Forms Contractor s Fully Executed Bid(s) (see Bid Template) Homeowner/Contractor Agreement Maximum Mortgage Worksheet Borrower s Acknowledgment Per contractor W-9, License, Bond, History Letter, and Insurance Contractor Profile Report Loan Submission Checklist 34

35 Closing and Servicing Forms SERVICING: Lender s Notice of Work Completion Change Order Request Lien Waiver and Release Loan Draw Request CLOSING DOC SET: Rehabilitation Loan Agreement Rehabilitation Loan Rider 35

36 Maximum Mortgage Worksheet 36

37 Contractor s Specifications of Repairs/Bid 37

38 Homeowner/Contractor Agreement Note: Confirm contractor sum matches finalized bid. Must be an actual completion date, not a timeframe 38

39 Lien Waiver and Release 39

40 Rehab Loan Agreement 40

41 Rehab Loan Rider 41

42 Lender s Notice of Work Completion 42

43 Borrower s Acknowledgement 43

44 Loan Submission One-Pack 44

45 Click here to add a longer headline about the slide Contractor Requirements and Bids

46 Contractor Requirements Contractor to provide: License Bond W-9 (must be current year) $1 million in liability insurance Contractor Profile Report VA ID Number 46

47 Licensing Requirements Lead Based Paint and Mold Abatement All repairs of this type require specialty license/certification. List the name of the company to be used for the repairs on the bid. Provide a copy of the verified license or certification. If a General Contractor is not licensed in these specific fields and is using a subcontractor for electrical or plumbing repairs, the subcontractor is required to provide a valid license for their profession. 47

48 Contractor ID Number Contractors need to obtain a VA Builder ID number at /appraiser_cv_builder_info.asp The VA Builder ID Number is not the only step to contractor approval. Up to 3 licensed contractors are allowed per file. Builders are not approved by the VA. They only need to register with VA to obtain a VA Builder ID number. Thus, there is no lengthy processing time and in most cases, an ID number can be issued within a day or two. 48

49 Builder ID Number To obtain a builder ID number, three items need to be submitted to the Construction and Valuation unit of the local VA Regional Loan Center having jurisdiction over the area in which the builder will construct property. These items are: Builder information and certification required form VA Form Equal Employment Opportunity Certification VA Form 8791 VA Affirmative Marketing Certification 49

50 Sample of Incomplete Bid No address for contractor No borrowers name or address/ job location Need explanation of reframe i.e. is it structural? Not signed by all parties ABC Company, Inc. Need breakdown of labor costs and material costs for each item Need specific location each item is taking place Need License # Only licensed plumber can perform plumbing work 50

51 Sample Complete Bid 51

52 Sample Complete Bid (cont d) 52

53 Sample Complete Bid (cont d) 53

54 Sample Complete Bid (cont d) 54

55 Self Help 55

56 Click here to add a longer headline about the slide After Closing

57 Loan Servicing A Welcome Call is placed to the homeowner(s) by a Construction Service Specialist that will be handling their renovation project. The Construction Service Specialist: Inquires if borrowers would like their Welcome Package ed or sent regular mail, confirm the address where they want their checks sent. Explains how the renovation process works, answer any questions and advise that the Welcome Package includes a toll free number and an address for them to use if they have any questions. 57

58 Renovation Customer Service Hours of Operation: 8 am 5 pm Pacific Time Toll Free: , Option 2 Fax: RenoServicing@PlazaHomeMortgage.com Please note: Loan Servicing Information can only be provided to the borrowers directly. 58

59 Click here to add a longer headline about the slide Process Flow

60 Process Steps Step 1: Borrower Finds a Property Step 2: Review the Purchase Contract Step 3: Find Contractor must have VA license. Step 4: Obtain Contractor Bid, Plans and Specs Step 5: Finalize Forms and Contractor Approval Items Step 6: Disclosing Fees Correctly TRID Step 7: Order Appraisal Step 8: Underwriting Step 9: Closing Step 10: Renovation Begins Step 11: Final Inspection Completion 60

61 Click here to add a longer headline about the slide Resources

62 Renovation Specialist Team Donna Chetner-Blackwell, Mountain and Pacific Jim Pontious, Central Jeri Murdock, Eastern 62

63 New Income Streams Think Outside the Box Providing the opportunity to stand out as a Specialty Originator! Home Remodeler EDUCATION! Create your own presentation for a real estate office Become certified to teach a free CE class hour** Set up displays in a home remodeling or an outdoor living/pool store* Roofer Get a bid, create a color board & develop a one-sheet with monthly payments Become a deal saver business partner. Search for those dirty dog listings * HomeStyle/VA only ** Check with your local issuing authority 63

64 Marketing Materials Log into Click on the Marketing Materials link on the right navigation 64

65 Customizable Materials: Originator to Consumer Quick, easy and customizable Originator to Consumer Marketing Resources. Simply download the materials from and add your contact information using Adobe Reader or Acrobat. You can even add your logo using a photo editing software. Customizable PDF Flyers & HTML s. Variety of photography options available for each product flyer. 65

66 Resources 66

67 Q & A Click here to add a longer headline about the slide