203 K St 203 K St 203 K Streamline 203 K Streamline li li - - PowerPoint PPT Presentation

203 K St li 203 K St li 203 K Streamline 203 K Streamline

Unlocking Sales for Realtors Unlocking Sales for Realtors Selling tired, distressed and foreclosed Selling tired, distressed and foreclosed Properties Properties

Today’s Challenge Today’s Challenge Today s Challenge Today s Challenge

 Large number of bank owned

Large number of bank owned properties that have condition issues properties that have condition issues that banks want to sell as is that banks want to sell as is

 Large number of distressed properties

Large number of distressed properties where the seller is unable to make where the seller is unable to make repairs due to lack of funds repairs due to lack of funds

 Inventory of property that is in need

Inventory of property that is in need

• f updating
• f updating

Financing Challenges Financing Challenges Financing Challenges Financing Challenges

 Lenders don’t want to do loans for

Lenders don’t want to do loans for properties that have habitability and safety properties that have habitability and safety issues. issues.

 Lack of construction financing available to

Lack of construction financing available to Fi Ti H b Fi Ti H b First Time Homebuyers First Time Homebuyers

 Credit score challenges and lack of down

Credit score challenges and lack of down t f d f fi t ti b k t f d f fi t ti b k payment funds for first time buyers make payment funds for first time buyers make majority of first time buyers FHA candidates majority of first time buyers FHA candidates

What is a 203k What is a 203k Streamline? Streamline?

 An FHA minor rehabilitation mortgage that

An FHA minor rehabilitation mortgage that allows non allows non-

• structural repairs and

structural repairs and improvements to be made to an existing improvements to be made to an existing improvements to be made to an existing improvements to be made to an existing property and financed into the loan property and financed into the loan Th i i h b Th i i h b

 The repair program permits homebuyers to

The repair program permits homebuyers to do up to approximately $30K in repairs to a do up to approximately $30K in repairs to a property and provides the funds for the property and provides the funds for the p p y p p p y p

• repairs. This can be expanded up to
• repairs. This can be expanded up to

approximately $38K when combined with an approximately $38K when combined with an Energy Efficient Mortgage. Energy Efficient Mortgage. Energy Efficient Mortgage. Energy Efficient Mortgage.

What are the qualifications What are the qualifications for a borrower for 203K for a borrower for 203K for a borrower for 203K for a borrower for 203K Streamline? Streamline?



Owner Occupied 1 Owner Occupied 1-

• 4 Family Property

4 Family Property 3 5 % D P t 3 5 % D P t



3.5 % Down Payment 3.5 % Down Payment



Minimum 620 FICO score Minimum 620 FICO score



Subject property that requires $5K Subject property that requires $5K



Subject property that requires $5K Subject property that requires $5K minimum in repairs minimum in repairs



Appraised value as improved that supports Appraised value as improved that supports th l t d i t th l t d i t the loan amount and improvements the loan amount and improvements

Eligible Properties Eligible Properties Eligible Properties Eligible Properties

 Single Family and PUD

Single Family and PUD

 2-4 Unit properties

4 Unit properties

 2 4 Unit properties

4 Unit properties

 Condominium units in FHA

Condominium units in FHA-

• approved

approved projects projects projects projects

 REO properties

REO properties

I neligible Properties I neligible Properties I neligible Properties I neligible Properties

 Log Homes

Log Homes

 Manufactured Homes

Manufactured Homes

 Manufactured Homes

Manufactured Homes

 Homes that have never been

Homes that have never been completed completed completed completed

 Homes that have been completely

Homes that have been completely d li h d i l di th f d ti d li h d i l di th f d ti demolished, including the foundation demolished, including the foundation

When to use a 203k When to use a 203k Streamline Streamline

 Repair/Replacement of roofs, gutters and

Repair/Replacement of roofs, gutters and downspouts downspouts

 Repair/Replacement/Upgrade of existing HVAC

Repair/Replacement/Upgrade of existing HVAC

 Repair/Replacement/Upgrade of existing HVAC

Repair/Replacement/Upgrade of existing HVAC systems systems

 Repair/Replacement of existing flooring

Repair/Replacement of existing flooring

 Minor remodeling, such as kitchens, bathrooms

Minor remodeling, such as kitchens, bathrooms which do not involve structural repairs which do not involve structural repairs

 Exterior and interior painting

Exterior and interior painting p g p g

 Weatherization: including storm windows and

Weatherization: including storm windows and doors, insulation, weather stripping, etc. doors, insulation, weather stripping, etc. Purchase and installation of appliances including Purchase and installation of appliances including

 Purchase and installation of appliances, including

Purchase and installation of appliances, including free free-

• standing Ranges, Refrigerators, Washer/Dryer,

standing Ranges, Refrigerators, Washer/Dryer, Dishwasher and Microwaves Dishwasher and Microwaves

When to use When to use continued continued When to use When to use continued continued…



Improvements for accessibility for persons with disabilities Improvements for accessibility for persons with disabilities



Lead base paint stabilization or abatement of lead base paint Lead base paint stabilization or abatement of lead base paint hazards hazards Repair replacement or the addition of exterior decks patios Repair replacement or the addition of exterior decks patios



Repair, replacement or the addition of exterior decks, patios Repair, replacement or the addition of exterior decks, patios and porches and porches



Basement remodeling which does not involve structural Basement remodeling which does not involve structural repairs repairs



Basement waterproofing Basement waterproofing



Window and door replacement and exterior siding Window and door replacement and exterior siding replacement replacement Well or septic system repair or replacement Well or septic system repair or replacement



Well or septic system repair or replacement Well or septic system repair or replacement



NO STRUCTURAL OR FOUNDATIONAL REPAIRS CAN BE NO STRUCTURAL OR FOUNDATIONAL REPAIRS CAN BE DONE DONE

Getting Started Getting Started Getting Started Getting Started

 Identify Buyer looking for a deal

Identify Buyer looking for a deal

 Identify property that needs work that

Identify property that needs work that y p p y y p p y would be a good deal for the buyer with would be a good deal for the buyer with certain improvements certain improvements

 Contact 203K expert

Contact 203K expert

 Good to identify licensed contractors to do

Good to identify licensed contractors to do work work

 Examine your own listings that would sell if

Examine your own listings that would sell if h h d C h h d C they had some T.L.C. they had some T.L.C.

Standard 203k vs. Standard 203k vs. Streamlined 203k Streamlined 203k

 1 General Contractor

1 General Contractor

 Consultant required

Consultant required Larger more complex Larger more complex

 2-

• 3 Specialized

3 Specialized Contractors Contractors Si l i l t t Si l i l t t

 Larger more complex

Larger more complex project project

 Additions, Structural

Additions, Structural

 Simple, single contract

Simple, single contract jobs jobs

 Repair, Replace,

Repair, Replace, OK OK

 $5,000 Minimum/No

$5,000 Minimum/No Maximum Maximum

 Repair, Replace,

Repair, Replace, Upgrade only Upgrade only

 No Consultant

No Consultant

 Detailed work write up

Detailed work write up

 4-

• 5 draw requests

5 draw requests

 $5K minimum/$30,000

$5K minimum/$30,000 Maximum Maximum

 2 checks per contractor

2 checks per contractor

 2 checks per contractor

2 checks per contractor

Why Streamline verse full Why Streamline verse full y 203k? 203k?

 Simple

Simple

 Fewer parties involved in process

Fewer parties involved in process

 Fewer parties involved in process

Fewer parties involved in process

 Less Expensive to Borrower

Less Expensive to Borrower F t Cl i F t Cl i If d k i If d k i

 Fast Closings

Fast Closings – If ducks are in a row If ducks are in a row these loans can close in 30 days or these loans can close in 30 days or l l less less

What We Require What We Require What We Require What We Require

 Licensed Contractor(s) must do work

Licensed Contractor(s) must do work

 Contracts between buyer and

Contracts between buyer and

 Contracts between buyer and

Contracts between buyer and contractor with scope of work and contractor with scope of work and itemized repairs/improvements itemized repairs/improvements itemized repairs/improvements itemized repairs/improvements

 Property must appraise at as

Property must appraise at as completed value at or above the sales completed value at or above the sales completed value at or above the sales completed value at or above the sales price plus repairs/improvements price plus repairs/improvements

What we require What we require q Continued Continued

 Work must commence within 30 days

Work must commence within 30 days

• f closing
• f closing

 Work must be complete within 6

Work must be complete within 6 months of closing months of closing

 10% reserve contingency for

10% reserve contingency for properties with all systems operation properties with all systems operation

 15% reserve contingency if all systems

15% reserve contingency if all systems are not functioning are not functioning

Renovation Basics Renovation Basics Renovation Basics Renovation Basics

 At closing, Residential Mortgage Services

At closing, Residential Mortgage Services creates a renovation escrow account creates a renovation escrow account

 50% of renovation funds are disbursed for

50% of renovation funds are disbursed for

 50% of renovation funds are disbursed for

50% of renovation funds are disbursed for the start of work at closing the start of work at closing

 Remaining 50% is disbursed after work is

Remaining 50% is disbursed after work is l d l d completed completed

 Included with the initial disbursement is an

Included with the initial disbursement is an instruction letter that explains how the final instruction letter that explains how the final instruction letter that explains how the final instruction letter that explains how the final disbursement works and provides contact disbursement works and provides contact information. information.

Advantages to Buyer Advantages to Buyer Advantages to Buyer Advantages to Buyer

 Buy a house and get what they really

Buy a house and get what they really want want

 Less buyer’s remorse

Less buyer’s remorse

 In many circumstances instant equity

In many circumstances instant equity

 In many circumstances instant equity

In many circumstances instant equity

 Cash to make improvements

Cash to make improvements

Advantages to Seller Advantages to Seller Advantages to Seller Advantages to Seller

 Repairs don’t have to be made to

Repairs don’t have to be made to property prior to sale property prior to sale p p y p p p y p

 Property moves quicker do to a larger

Property moves quicker do to a larger pool of buyers pool of buyers pool of buyers pool of buyers

 Speed

Speed – – closings are typically faster closings are typically faster due to lack of appraisal issues and due to lack of appraisal issues and due to lack of appraisal issues and due to lack of appraisal issues and repairs repairs

Advantage to Realtor Advantage to Realtor Advantage to Realtor Advantage to Realtor

 Tough listings become more

Tough listings become more marketable due to renovation features marketable due to renovation features

 You sell properties faster

You sell properties faster

 You can work with buyers that aren’t

You can work with buyers that aren’t y looking for a perfect house looking for a perfect house – – but one but one they can make near perfect they can make near perfect

 You will make sales you are walking

You will make sales you are walking by now by now

Who Are We? Who Are We? Who Are We? Who Are We?

 We are a Full Service Direct/Correspondent Lender

We are a Full Service Direct/Correspondent Lender based in Portland Maine based in Portland Maine W C tl h 15 B h I N E l d W C tl h 15 B h I N E l d

 We Currently have 15 Branches In New England

We Currently have 15 Branches In New England with 2 in CT with 2 in CT – – Glastonbury & Plainfield Glastonbury & Plainfield

 We closed $750 Million in Retail loan production in

We closed $750 Million in Retail loan production in

 We closed $750 Million in Retail loan production in

We closed $750 Million in Retail loan production in 2009 2009

 Our entire focus as a lender is on purchase money

Our entire focus as a lender is on purchase money d i h l i hi d i h l i hi and serving purchase money relationships and serving purchase money relationships

 We are common sense mortgage bankers that have

We are common sense mortgage bankers that have been in business since 1991 been in business since 1991 been in business since 1991 been in business since 1991

What does the K What does the K really really stand for stand for What does the K What does the K really really stand for stand for in 203K? in 203K?

K lli!!!! K lli!!!! Kelli!!!! Kelli!!!! Let me help you get Let me help you get Let me help you get Let me help you get Ritcher with the 203k Ritcher with the 203k Ritcher with the 203k Ritcher with the 203k Streamline Streamline

Q&A Q&A Q&A Q&A

 I will take your questions now

I will take your questions now