Moving Single-Family Financing Initiatives Forward I m HOME Conference October 2-4, 2017
Where Fahe Works Fahe and our Members create transformational change in: KY, TN, VA, WV, AL, MD Fahe is on a mission to eliminate persistent poverty in Appalachia. We provide our Network of 50+ local leaders with the resources of finance, collaboration, innovation, advocacy, and communication to help craft long-lasting solutions for the needs of our region. Fahe coordinates a network of 502 Direct packaging partners in: AL, DE, FL, GA, IN, KY, MD, MI, MS, NY, NC, OH, PA, SC, TN, VA, WV, VT Fahe declared a Champion of Rural Housing by USDA streamlines the delivery of 502 Direct affordable home loans and uplifts our nation's rural area alongside 40+ packaging partners in18 states. Fahe is licensed to originate and service loansin: KY, TN, VA, WV, IN, AL, FL, MI, MS, and soon ME Fahe delivers housing capital and supports long-term success for homeowners through quality customer care and personalized account management. (1/1/17)
Barriers to Homeowenrship Housing Stock Appraisal gap Lenders Homebuyer ready borrowers
How Fahe Works Fahe is on a mission to eliminate persistent poverty in Appalachia. We do this by providing our Network of 50+ local leaders with the resources of finance, collaboration, innovation, advocacy, and communication which allows them to bring leadership, housing, education, health and social services, and economic opportunity to Appalachia. By working hand-in-hand with our Membership we help the people of Appalachia craft long-lasting solutions for the needs in ourregion. Finance Collaboration Innovation Advocacy Communication Local Leaders Leadership Housing Education Health and Social Services Economic Opportunity
Products Loan Program Credit Score Income Limits Ratios LTV Property Eligibility Lender Requirements USDA Guaranteed 620+ for all borrowers True no score w/ 3 alternative credit trade lines Family Size 1-4 $78,200 5-8 $103,200 29/41 100% http://eligibility.sc.egov.usda. gov/eligibility/welcomeaction.do GUS accept or refer with conditions accpetable of credit waiver FHA 620+ for all borrowers None 31/43 96.50% All areas eligible DU Accept VA 640+ for all borrowers True no score w/ 3 alternative credit trade lines None 41 back 100% All areas eligible VA Eligibility DD214 Conventional 680+ None 36/45 80% None DU Accept Conventional No MI 680+ $97,650 28/45 97% KY Properties DU Accept Home Possible 620+ 100% AMI per census tract (unless property is located in a underserved area then there are no income limits) http://www.freddiemac.com/hom epossible/eligibility.html 29/41 97% (down payment assistance avaliable) None AUS Accept USDA Direct 640+ for all borrowers True no score w/ 3 alternative credit trade lines 80% AMI for household size 29/41 100% http://eligibility.sc.egov.usda. gov/eligibility/welcomeaction.do N/A Project Reinvest Qualify for First Mortgage through Fahe 100% AMI 105% None Qualify for First Mortgage through Fahe
Delivery System Fahe As Direct Lender Local Partner as Standard Broker Local Partner as Basic Broker Local Partner as Homebuyer Counselor Homebuyer Ed If needed If needed If needed Yes Certification via Member/Partner NMLS Licensed Yes Yes Yes No Person Take An Application Yes Yes Yes No Rate Lock Yes Yes-Broker chooses rate and days locked Yes-No choice in rate, only days locked Initial docs Yes Yes No No originated in Process the Yes Yes No No application Underwrite Yes No No No Close in the name Yes No No No Industry Practice Yes Yes Yes Yes-Fahe differs here in that we recognize NWA Certificates where industry only recognizes HUD No Earn 3.5-4% 1.5%-2.5% chosen by Broker 1% $375.00
MH Financing Appraisal - HUD Tag initiates: MH Addendum Date Set Look for MH as comps Deducted value of $5,000 - $10,000 As built and final increase costs Need for Finance to set the unit Additional inspections increase closing costs Foundation and Completion Not all investors will purchase loans Barriers
MH Financing Opportunities Appraisals Fannie/Freddie could decide as part of duty to serve to accept traditional appraisal s where MH set on permanent foundation. Need for Finance to set the unit Construction lender opportunity or can we develop a product that will fund upfront? Inspections Fahe s Deferred DPA/Closing Costs of $10,500 can help cover these costs and reach LMI Borrowers Not all investors will purchase loans NFCDCU product low MI/accept DPA USDA Guarantee and 502 Direct
361loans of $43,179,758 63 grants of $342,247 Direct Homebuyer Lending Impact 94% First time homebuyers 48% Female headed households 20% Minority households 868 people Average AMI of 59%
Impact Invested $291M in Appalachia in FY2017. Manages more than $1.15 Billion in assets Served nearly 80,000 people last year Touched 25,000 homes.
Sara Morgan Chief Operating Officer Fahe 319 Oak Street Berea, KY 40403 859-228-2134 sara@fahe.org Thank you
I M HOME CONFERENCE Ignatius MacLellan New Hampshire Housing Finance Authority October 3, 2017 1
Why Manufactured Housing Matters Aligns with the New Hampshire Housing s mission for working with low moderate income families Together with Fannie Mae and lenders: goal bring AFFORDABLE, conventional financing to borrowers who need it the most Extreme need for affordable housing Lack of stick-built inventory Photo courtesy of the New Hampshire Community Loan Fund
New Hampshire: Key Ingredients The Home: Manufactured homes qualify as real estate Even when located on another s land The Star Partner: New Hampshire Community Loan Fund Helps residents buy their MH parks and convert to ROCs Have portfolio loan program for the MH too Able to push out downpayment assistance Able to get ROCS approved The Rocs 123 ROCs in New Hampshire
New Hampshire Advantage: ROC Structure The Home: MH owned as real estate in fee simple The ROC and the site: Homeowners also has: Share in ROC Occupancy right and agreement
Challenge for Manufactured Housing FINANCING!
Home Preferred What is the Answer?
MH ROCs Loan Characteristics: Fannie Mae conventional mortgage Up to 95% LTV with low mortgage insurance coverage Purchase or limited cash out refinance Homebuyer Education required for first-time homebuyer, at least one borrower This program also includes all the features of Home Ready
MH ROCs Property Requirements: MH built per the HUD MH standards (effective June 1976) HUD data plate 12 feet wide, minimum 600 square feet Wheels, hitch, axels removed Attached to permanent foundation system per manufacturer s requirements
ROC Requirements Must be approved ROC by Fannie Mae
Title, Hazard & Closing Title insurance requirements; same as stick-built homes Hazard insurance requirements; same as stick-built homes Closing additional documentation Mortgage rider (Borrower) Affidavit of intent to be real estate (Borrower) Recognition agreement (Borrower, lender and ROC)
MH Finance Challenge: Small Loan Size: Lender Compensation, Sales Commission and Investor Return Lender/Realtor Loan Size Lender Comp (2.05% plus $900 fees) LO Comp (1%) $180,000 $3,690 + $900=$4,590 $1,800 $11,000 $ 50,000 $1,025 + $900=$1,925 $ 500 $ 3,200 Same thing on Investor side Sales Commission (6%, assumed 95% LTV) Loan Size Upfront (90 bps) Annual Servicing (25 bps) $180,000 $1,620 $450 $ 50,000 $450 $125
State funds New Hampshire Housing MH ROCs Enhancements downpayment and closing costs Homebuyer Tax Credit aka mortgage credit certificate
MCC Explanation Would you like to save up to $2,000 a year off your taxes as long as you are living in your home and paying mortgage interest? Eligibility Be a first-time homebuyer (have not owned a home in three years) or are purchasing a home in a targeted area. Be qualified for a new mortgage. MCCs cannot be used with existing loans. Intend to occupy the home as your principal residence. Be purchasing a house that is a single family residence and that meets certain purchase price limits. Meet certain income limits. Must have a tax liability to use the credit.
MCC Example Example: $50,000 mortgage at 4.75% interest rate Interest paid $2,375 ($50,000 mortgage x 4.75% interest rate) MCC Credit Rate 50% MCC Credit $1,200 ($2,375 x 50 % MCC rate) In this example, may boost your take home pay by $100 per month; money that you can use to pay your mortgage! More info: https://www.gonewhampshirehousing.com/ourprograms/homebuyer-tax-credit Note: The MCC is more valuable for higher dollar mortgages! $180,000 loan at 4.75% would get the full $2,000 for many years.
Photos courtesy of the New Hampshire Community Loan Fund
Moving Single-Family Finance Initiatives Forward
Fifth Third Mortgage Fifth Third is a long time manufactured home lender: Manufactured homes that have been converted to real property Utilizing secondary market products with almost no lender overlays Other GSE VA 0.22% 9.25% 49.75% Loan-to-Value by Product GSE 95% VA 100% based on entitlement FHA 96.5% purchase 97.75% refinance FHA 40.78% Refinance 43.57% Purchases 56.43%
Fifth Third Mortgage Manufactured home lending can be CRA rich 24% CRA Not CRA 76% Fifth Third offers three assistance programs that are available for manufactured homes Down payment assistance grant of 3%, up to $3,600, for low income borrowers or borrowers purchasing a home in a low income tract FHA Closing Cost Assistance grant of 3%, up to $3,600, for low income borrowers or borrowers purchasing a home in a low income tract CRA Fee Waiver program that waives all Fifth Third lender fees when the property is located in a low income tract
Fifth Third Mortgage Challenges Managing the lien position on all collateral manufactured unit and land An up-to-date industry resource identifying state and local conversion requirements Conversion to real property varies by state and local government requirements making it difficult for regional and national lenders to perfect lien positions. Is the title retired or retained? Real property records maintained separately from personal property record. Education to title and settlement agencies Title companies are not always proficient in understanding the requirements. Some regional and national title agencies are not accepting our title and settlement orders. Changing perceptions through performance Risk based pricing based on lower loan amounts, lower FICOs, higher LTVs, and higher delinquencies
Fifth Third Mortgage Opportunities for Fifth Third in the manufactured home lending industry: Continue to originate manufactured home loans through the retail channel with few overlays for delivery into the secondary mortgage market Facilitate the introduction of newly built inventory to buyers by working with Freddie Mac, manufacturers, retailers, private mortgage insurers, and industry advocates to implement a one time close construction to permanent financing process Aggregate manufactured home loans for delivery into the secondary market through select correspondent relationships