FHA 203k Full

Transcription

1 FHA 203k Full This information is for wholesale mortgage professionals only and is not to be reproduced or distributed without permission. All Rights Reserved. Carrington Mortgage Holdings, LLC and its affiliates 1

2 OPENING NOTES Before We Get Started To ask a question, please use your Questions Panel

3 YOUR WEBINAR HOSTS Jim Nudelman, Senior Training Specialist Jen Rocha, Underwriting Manager Matt Evans, Divisional Sales Manager

4 YOUR WHOLESALE, LENDING PARTNER 4

5 INTRODUCTION About Us Carrington Mortgage Services, LLC (CMS) is a fully integrated mortgage company with lending and mortgage servicing operations, and an affiliated real estate brokerage company. We service over $40 billion in mortgages and are licensed in many states across the U.S. We strive to assist our customers in selecting the right loan program and terms, walk them through the process, and make ourselves available to answer questions in order to close loans on time. In other words, we offer great mortgage programs delivered with superior customer service. Our values, built on integrity, transparency and equity, enable us to select, employ and retain the "best and brightest" Mortgage Professionals. Our Mortgage Professionals are licensed and complete ongoing compliance education. Carrington's mission is to grow our business by focusing on service and quality.

6 OPERATIONS CENTERS Nationwide Service Operations Centers located throughout the U.S. to serve you and your clients and we are licensed in 45 states

7 CARRINGTON IS A NO FEE LENDER No Lender Fee Carrington is a No Fee Lender! All Lender Fees eliminated and rates are All In Your voice counts! We implemented the No Lender Fee due to our Broker feedback and suggestions. 7

8 GOVERNMENT LOANS 680+ Now Accepted Government Loans above 680 FICO FHA, VA and USDA Loans, Purchase and Refinance 8

9 ORIGINATIONS FICO < 630, 2005 vs The Current Market Is Underserved 2005: % of Originations 2013: % of Originations 1 out of 7 1 out of % 13% 99.78% 87% FICO < 630 FICO => 630 FICO < 630 FICO => 630 9

10 98 MILLION CONSUMERS HAVE A FICO FROM 500 TO 649 1/3 of all US Consumers FICO > 680 IS HIGHLY COMPETITIVE 80 CONSUMER FICO DISTRIBUTION (# in Millions) Over 90 companies offer products FICO > 680 Increased competition FICO < 680 IS LESS COMPETITIVE Million Consumers Less than 20 companies offer products FICO < 620 More opportunity to differentiate Originations with FICO s < 620 equated to only 0.2% of all origination in MILLION CONSUMERS, (31%) of the market, have a FICO score and remain underserved! Carrington understands there is an opportunity in a less crowded space - FICO SCORE 10

11 203(K) STANDARD THE ESSENTIALS 11

12 FHA 203K Full What we will cover Introduction to Renovation Lending What is a 203(k) Standard Loan? 203(k) Process Flow and Requirements Eligible 203(k) Repairs Standard 203(k) Responsibilities Required 203(k) Required Forms and Fees Post Closing Process 12

13 INTRODUCTION TO RENNOVATION LENDING 13

14 INTRODUCTION TO RENNOVATION LENDING Buy the house they want and build the house they ve always dreamed of Borrower can own a home that best suits their living needs More favorably priced home in a prime location Creates more flexibility in qualifying than a HELOC 14

15 INTRODUCTION TO RENNOVATION LENDING What Could Renovation Loans Focus On? Increasing square footage Adding new bedrooms or bathrooms Renovating existing kitchens Updating floor plans Creating additional living space 15

16 INTRODUCTION TO RENNOVATION LENDING Why Should I Offer 203k? It opens NEW doors for borrowers and referral sources (i.e. Realtors) Reduces lost opportunities Revitalizes communities by renovating homes Transforms foreclosures/reo homes Expands virtually any borrower s ability to procure their ideal home in their ideal location 16

17 WHAT IS A 203(K) STANDARD LOAN? 17

18 WHAT IS A 203(K) STANDARD LOAN? Single closed end mortgage Purchase or Refinance transactions permitted One Permanent loan. No need for second mortgages Considers the after-improved value of the property Work is completed after loan closing Repair funds are disbursed as repairs are completed 18

19 WHAT IS A 203(K) STANDARD LOAN? 203(K) Limited Minimum Total Repair Cost = $5, (K) Standard Minimum Total Repair Cost = $5,000 Maximum Total Repair Cost = $35,000 which includes a 15% Contingency Reserve Maximum Total Repair Cost = 50% of the Subject-To Appraised Value Eligible Repairs are cosmetic in nature only Eligible Repairs may include structural changes or additions 19

20 WHAT IS A 203(K) STANDARD PROCESS FLOW AND REQUIREMENTS 20

21 203(K) STANDARD PROCESS FLOW 21

22 203(K) STANDARD ESCROW REQUIREMENTS 22

23 203(K) STANDARD CREDIT REQUIREMENTS CMS has minimal credit overlays: Max DTI is 45%/49.99% regardless of AUS feedback Manufactured Homes are NOT permitted Cash-Out Refinance is NOT permitted Non-Traditional Credit is NOT permitted Non-Occupant Co-Borrowers NOT permitted Down Payment Assistance (DPA) programs NOT permitted 23

24 REPAIR AND IMPROVEMENT REQUIREMENTS Work must begin within 30 days of loan closing Work may not stop for more than 30 consecutive days Work must be completed within time frame shown on Loan Rehabilitation Agreement Work may not exceed 6 months Complete foundation system must remain in place Any foundation repairs require 20% contingency reserve Room additions or additions to the structure are permitted 24

25 203(K) STANDARD APPRAISAL REQUIRMENTS Purchase Transactions require ONLY a Subject To appraisal Refinance Transactions require a Subject To and As Is appraisal Appraiser MUST receive all cost estimates (bids) so that an afterimproved value can be estimated Description of the proposed repairs/improvements must be included in the appraisal report and contractor s estimate (Bid) Appraiser must indicate after-improved value subject-to completion of proposed repairs/improvements in reconciliation section of appraisal Complete home inspection is required on all REO and vacant properties Appraisal must review any changes to the bid 25

26 203(K) REPAIRS 26

27 POSSIBLE 203(K) STANDARD REPAIRS Eligible Repairs Changes to improve function/modernize Elimination of Health and Safety Hazards (including lead based paint ) Changes for cosmetic or aesthetic appeal and elimination of obsolescence Reconditioning or Replacement of Plumbing Major Structural Alterations Ineligible Repairs Alterations for Commercial Use Tennis Courts Television/Satellite Dishes Self-Help Swimming Pool Installation Internal/External Painting Swimming Pool repair permitted up to $1,500 27

28 203(K) STANDARD RESPONSIBLITIES 28

29 203(K) STANDARD CONTRACTORS BID 203k Requirements for reviewing contractor s proposal All repairs/improvements must meet any and all local codes and ordinances. All required permits must be obtained prior to closing. Review and verify the contractor s credentials and work experience. Contractor s Estimate/Bid Requirements: Must be on contractor s letter-head Name of business and address (including contact information) Subject property address Borrower(s) name Start date of repairs/improvements Estimated completion date Description of repair/improvement and cost The contractor must be specific and itemize The contractor must reference permits and fees If permits are not required The bid MUST state No Permits Required The contractor and borrower must sign the estimate/bid 29

30 203(K) STANDARD CONTRACTORS BID Sample Contractor Bid: 30

31 203(K) Standard HUD Consultant HUD approved Consultant required on all 203k Standard Transactions Evaluates property to determine required repairs to meet FHA minimum standards Considers non FHA improvements borrower would like to make The Consultant must be approved by HUD and accepted by CMS. Link to webpage: Must be approved by HUD and accepted by CMS Consultant s fee determined by repair amount 31

32 203(K) STANDARD PLAN REVIEW HUD Consultant can also act as plan reviewer (the plan review fee can be eliminated) Plan Reviewer inspects property and plans Provides guidance without preparing architectural exhibits Utilities should be for on site review unless specific in the bid Plan Reviewer may NOT be the Contractor 32

33 REQUIRED FORMS AND FEES 33

34 203(K) STANDARD REQUIRED FORMS 203k Standard Required Forms can be located at the Carrington Wholesale website: Borrower s Letter of Completion Contractor Profile Borrower Identity of Interest Certification Consultant Identity of Interest HUD-9746-A Draw Request Letter of Completion Owner Contractor Agreement Rehabilitation Loan Agreement 34

35 203(K) STANDARD DRAW REQUEST FORM Form HUD 9746 Draw Request Requirements The Consultant must meet with the borrower(s) at the site to determine if cost estimates are acceptable. The cost of labor and materials must be shown. Upon completion of the review, the Consultant must sign the certification and return to CMS. CMS must send the Draw Request form to the appraiser. The appraisal cannot be performed unless the Consultant has signed the certification on the Draw Request form. The Appraiser may not add additional work items to the list. 35

36 203(K) STANDARD DRAW REQUEST FORM Form HUD 9746 Draw Request Sample Form The HUD Consultant will indicate the suggested contingency reserve percentage. CMS requires a minimum of 15% regardless 36

37 203(K) STANDARD DRAW REQUEST FORM Form HUD 9746 Draw Request Sample Form - Continued Column 1 will list all the required repairs with the itemized cost. Line 36 will state the total cost of the repairs 37

38 203(K) STANDARD OWNER/CONTRACTOR AGREEMENT 38

39 203(K) STANDARD OWNER CONTRACTOR AGREEMENT Owner/Contractor Agreement 2nd Paragraph Repairs must be completed within 6 months 39

40 203(K) STANDARD CONTRACTOR PROFILE 40

41 203(K) STANDARD CONTRACTOR PROFILE 41

42 203(K) STANDARD CONTRACTOR PROFILE 42

43 203(K) STANDARD FEE S CHART All fees are calculated off the repair cost Line B1 of the Maximum Mortgage Worksheet 43

44 203(K) STANDARD FEE S CHART All fees are calculated off the repair cost Line B1 of the Maximum Mortgage Worksheet 44

45 POST CLOSE PROCESS 45

46 203(K) STANDARD POST CLOSE PROCESS A CMS associate from Escrow Servicing will contact the borrower within 1 week of funding and advise the following: The expected repair completion date: Within time frame listed on the contract, or Within 6 months Required forms that must be executed as work is completed Required forms that must executed once all repairs are completed Any change in repairs must be approved by a CMS Underwriter prior to completing the work This should only occur on cost over-runs and unforeseen changes Funds are disbursed as required repairs are completed No funds are given to the borrower directly Principal reduction only 46

47 203(K) STANDARD - POST CLOSE PROCESS Intermediate Draws A maximum of 4 intermediate draws are permitted. The draw schedule will be established and agreed upon by the Consultant, Contractor, and CMS prior to the initial appraisal. The escrowed funds are released based on the percentage of work completed. Form HUD k Draw Request is completed at each draw request by: Contractor Inspector (Consultant) Underwriter A satisfactory inspection must be completed at each draw request. The inspection report is completed on the HUD-9746 Draw Request form. A holdback of 10% will be required on all intermediate draws. 47

48 203(K) STANDARD POST CLOSE PROCESS Final Draw Request Once all the approved work as been completed, CMS will send the borrower(s) the following forms to be signed and executed: Letter of Completion Signed by the borrower(s), and Lien Release Signed by the contractor Both forms must be signed and executed and submitted to CMS prior to requesting the final inspection. A final inspection will NOT be ordered until both forms are received. CMS will schedule an inspection with the Inspector/Consultant if necessary. Generally, the Consultant will complete the final inspection then notify the lender. The inspection will determine if all the repairs were completed according to the accepted exhibits. 48

49 203(K) STANDARD POST CLOSE PROCESS The Borrower s Letter of Completion The borrower(s) signs the form to confirm all work is completed satisfactorily 49

50 203(K) STANDARD POST CLOSE PROCESS The Lien Release The contractor signs the form to confirm that all vendors, subcontractors, etc. are paid and his contract will be satisfied upon payment of the specified amount. The lien release amount should match the final disbursement amount to the contractor. 50

51 203(K) STANDARD POST CLOSE PROCESS The Lien Release - Continued The contractor signs the form to confirm that all vendors, subcontractors, etc. are paid and his contract will be satisfied upon payment of the specified amount. The lien release amount should match the final disbursement amount to the contractor. 51

52 203(K) STANDARD POST CLOSE PROCESS Title Update/Date Down and Invoice Used to confirm no mechanics liens have been placed and any Notices of Commencement have been resolved. CMS may order multiple Title Updates during the rehabilitation process to ensure there are no liens on the subject property. Must be dated within a reasonable timeframe to contractors lien release. Title Update s are ordered by the Escrow Account Servicing team. After closing, direct all questions and/or concerns to the CMS escrow servicing mailbox at: escrowaccountservicing@carringtonms.com 52

53 203(K) LOANS HOW TO GET STARTED Contact your Carrington Mortgage Services Wholesale Account Executive to get started and begin submitting loans. Visit for more information. OR If you are new to Carrington get approved by going to 53

54 UPCOMING WEBINARS Reserve your Seat for upcoming July webinars! "The Carrington Loan" Webinar for Brokers Wed. July am PST Register: Carrington Wholesale Lending Broker Call Wed. July 15-11am 12pm PST Register: Visit for a complete list of FREE webinars hosted by Carrington every month. 54

55 CHECK US OUT ON SOCIAL MEDIA Like US on Facebook and Follow Us on Twitter and LinkedIn 55

56 CONTACT US Contact Information Carrington Mortgage Services 1610 E. Saint Andrew Place, Suite B-150 Santa Ana, CA Sam Bjelac, Eastern Division: Matt Evans, Western Division: Rey Maninang, National Sales Director: 56

57 THANK YOU 57

58 Copyright Carrington Mortgage Services, LLC headquartered at 1600 South Douglass Road, Suites 110 & 200A, Anaheim, CA NMLS ID Nationwide Mortgage Licensing System (NMLS) Consumer Access website: AZ: Mortgage Banker BK ; 2159 McCulloch Blvd 4, Lake Havasu City, AZ CA: Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act, File CO: Check license status of your mortgage loan originator at GA: Georgia Residential Mortgage Licensee IL: Illinois Residential Mortgage Licensee. KS: Supervised Loan License SL KY: Mortgage Loan Company License MC MN: This is not an offer to enter into an interest rate lock agreement under Minnesota Law. MO: Residential Mortgage Broker License S. NH: Licensed by the New Hampshire Banking Department. NJ: Licensed by the N.J. Department of Banking and Insurance. NY: Licensed Mortgage Banker NYS Department of Financial Services. New York Mortgage Banker License B500980/ OH: Ohio Mortgage Broker Act Mortgage Banker Exemption MBMB (FHA, DE & VA automatic loans only) OR: Mortgage Lender License ML4886. PA: Licensed by the Department of Banking. RI: Rhode Island Licensed Lender, Lender License LL. VA: Licensed by the Virginia State Corporation Commission MC5382. WA: Consumer Loan License CL2600. Also licensed in AL, AR, CT, DE, DC, FL, ID, IN, IA, ME, MD, MS, MT, NM, NC, OK, SC, TN, TX, UT, WV and WI. NOTICE: All loans subject to credit, underwriting and property approval guidelines. Offered loan products may vary by state. There is no guarantee that all borrowers will qualify. Restrictions may apply. This is not a commitment to lend. Terms, conditions and programs are subject to change without notice. This information is for mortgage professionals only and is not intended for distribution to consumers. Carrington Mortgage Services is not acting on behalf of or at the direction of HUD/FHA or any government agency. All rights reserved. This presentation is intended for informational purposes only and shall not be relied upon as compliance advice. It summarizes practices for doing business with Carrington and is subject to change at any time without notice. This information is provided as a convenience for industry professionals only and may not be reproduced or distributed without permission. This information is for wholesale mortgage professionals only and is not to be reproduced or distributed without permission.