presented by carol jordan nmls# 98985 and renee duval nmls#97967 certified mortgage professionals nh...
TRANSCRIPT
Presented byCarol Jordan NMLS# 98985 and Renee Duval NMLS#97967
Certified Mortgage ProfessionalsNH Mortgage Bankers Association designation
Licensed by the New Hampshire Banking DepartmentNMLS ID# 2561
MA Lender License #MC2561
Selling Distressed Properties
Approved by the New Hampshire Real Estate Commission
E1569 – 3 hours continuing education
Selling Distressed Properties
Rehab Loans & Other Options
Turn This INTO This This
Merrimack Mortgage Company Inc. NMLS#2561
Selling Distressed PropertiesApproved by the NH Real Estate Commission Course #E1569
Merrimack Mortgage Company Inc. NMLS#2561
The views expressed in this presentation are those of the presenters, Renee Duval and Carol Jordan and do not reflect those of our employer, colleagues or its clients.
The information provided by us is for
informational purposes only and is not intended as legal or tax advice.
Disclaimer
FHA 203K (s)FHA 203K
Fannie Mae Home StyleRural Development
NH HousingBank/portfolio options
What Rehab options are available?
Merrimack Mortgage Company Inc. NMLS#2561
203K is an FHA rehab loan
203Ks is the streamline version of the FHA 203K
FHA 203K and 203Ks
Merrimack Mortgage Company Inc. NMLS#2561
FHA 203K and 203Ks
FULL 203K Streamline 203K
Over $35,000
Structural changes ok
2+ months to finish
Several disbursements
Under $35,000
No structural changes
Work to be completed within 60 days
Only 2 disbursements
Lets Break it Down and Get into Some Detail
Merrimack Mortgage Company Inc. NMLS#2561
Eligible properties
Owner Occupied Single Family Homes
Owner Occupied 2-4 family homes
FHA approved condos
FHA 203K and 203Ks
Merrimack Mortgage Company Inc. MLS#2561
Ineligible Properties
Investment Properties 2nd Homes Co-ops Mobile Homes Spec Homes
FHA 203K and 203K (s)
Merrimack Mortgage Company Inc. NMLS#2561
Eligible Work Items
Repair/Replace/Upgrade
◦roofs, gutters, downspouts◦heating and/or air conditioning systems◦plumbing ◦electrical systems◦flooring
FHA 203K and 203K (s)
Merrimack Mortgage Company Inc. NMLS#2561
Eligible Work Items
Repair/Replace/Upgrade
◦septic systems
◦wells
◦decks & porches
FHA 203K and 203K (s)
Merrimack Mortgage Company Inc. NMLS#2561
Eligible Work Items
Minor remodeling with no structural changes
kitchens
bathrooms
basements
Merrimack Mortgage Company Inc. NMLS#2561
FHA 203K and 203K (s)
Eligible Work Items
Weatherization
◦windows
◦doors
◦ insulation
◦roof & attic ventilation
◦siding
FHA 203K and 203K (s)
Merrimack Mortgage Company Inc. NMLS#2561
Eligible Work Items Purchase and installation of appliances
◦ ranges/oven
◦ refrigerators
◦ washers/dryers
◦ dishwashers
◦ built in microwaves
Merrimack Mortgage Company Inc. NMLS#2561
FHA 203K and 203K (s)
Eligible Work Items
lead based paint stabilization or abatement
accessibility improvements for persons with disabilities
FHA 203K and 203K (s)
Merrimack Mortgage Company Inc. NMLS#2561
Eligible Work Items
Painting◦ Interior ◦ Exterior
Basement waterproofing
FHA 203K and 203K (s)
Merrimack Mortgage Company Inc. NMLS#2561
These items are eligible for full 203k only..
Major rehabilitation or remodeling
Relocation of load bearing walls
Repair of structural damage
Merrimack Mortgage Company Inc. NMLS#2561
FHA 203K (full version)
These items are eligible for full 203k only..
Repairs/rehab requiring architecturaldrawings or exhibits
Landscaping or other site amenities
Merrimack Mortgage Company Inc. NMLS#2561
FHA 203K (full version)
These items are eligible for full 203k
Any repair or improvement requiring a work schedule longer than 2 months
Rehabilitation activities that require more than 2 payments per specialized contractor
Required appraisal repairs that are not eligible repairs under the streamline 203K
FHA 203K (full version)
Merrimack Mortgage Company Inc. NMLS#2561
County 1-unit 2-unit 3-unit 4-unit
Belknap, Carroll, Cheshire, Coos, Grafton, Merrimack, Sullivan $271,050 $347,000 $419,425 $521,250
Hillsborough $295,550 $379,350 $457,350 $568,350
Rockingham,Strafford
$417,000 $533,850 $645,300 $801,950
FHA 203K(s) Max Loan Limits
Merrimack Mortgage Company Inc. MLS#2561
Using 203K to purchase a home
Make the house meet appraisal standards Make the house meet the buyer’s needs Take care of deferred maintenance issues
Minimum down payment of 3.5% of the acquisition cost required for Purchases
FHA 203K and 203K (s)
Merrimack Mortgage Company Inc. NMLS#2561
Using 203K to purchase a home
Down Payment & Loan Amount based on acquisition cost
Sales price = $245,000 Rehab = $ 35,000 Acquisition Cost = $ 280,000 3.5% down = -$ 9,800 Loan $270,200
FHA 203K and 203K (s)
Merrimack Mortgage Company Inc. NMLS#2561
Example Calculation of Down Payment
Sales price = $245,000+Rehab $ 35,000= Acquisition Cost $280,000
$280,000 X 3.5% = $9,800 minimum down
$280,000 - $9,800 = $270,200 max loan
FHA Max loan limits per county apply
FHA 203K and 203Ks
Merrimack Mortgage Company Inc. MLS#2561
Acquisition cost can be as much as110% of the “as completed” appraised value
Acquisition Cost = Sales Price + Rehab Escrow
Acquisition Cost / 110% = minimum value “as completed”
FHA 203K and 203K (s)
Merrimack Mortgage Company Inc. NMLS#2561
Acquisition Cost & Appraisal
Sales price = $245,000+ Rehab $ 35,000=Acquisition Cost $280,000
Acquisition cost can be as much as110% of the “as completed” appraised value
$280,000 / 110% = $254,500
Minimum appraisal is $254,500
Note: Loan amount is $270,200
FHA 203K and 203Ks
Merrimack Mortgage Company Inc. NMLS#2561
Appraised Value Dictates Max Loan Amount
Appraisal X 110% = Minimum value to still put minimum down
Test◦ Sales price = $245,000
+Rehab $ 35,000= Acquisition Cost $280,000
◦ Appraised Value = $254,500◦ $254,500 X 110% = $279,950 = more than loan
Note: Loan amount is $270,200
FHA 203K and 203Ks
Merrimack Mortgage Company Inc. NMLS#2561
Effect of a low appraisal $168,200 appraisal$185,000 acquisition cost
$165,000 appraisal$185,000 acquisition cost
Appraisal $168,200 X 110% = $185,020
Acquisition cost $185,000
Appraisal X 110% is more than acquisition cost so max financing is available
$185,000X 3.5%=$6,475 down payment
Appraisal $165,000 X 110% = 181,500
Appraisal X 110% is less thanacquisition cost so an extra calculation is required
$181,500X 96.5%
=175,140 max loan
Acquisition Cost $185,000- max loan -175,140
=Down payment $ 9,860
Available for Refinances too!
Buy “as is” and start rehab processafter closing at new owner’s convenience
Existing owners can do home improvements Maximum Loan to Value is 96.5% of
“as completed” value for Refinances
FHA 203K and 203K (s)
Merrimack Mortgage Company Inc. NMLS#2561
Appliances
Identify appliances by model Estimates from stores should include installation in the price
A labor estimate from the installing contractor is necessary when the price does not include installation
FHA 203K and 203K (s)
Merrimack Mortgage Company Inc. NMLS#2561
All contractors must provide licenses where required by state or local municipalities and/or the licenses of specialty sub-contractors like plumbers or electricians
For properties built before 1978, contractors must be lead paint certified.
Contractors cannot be related to the borrower
Merrimack Mortgage Company Inc. NMLS#2561
FHA 203K and 203K (s)
Contractor credentials, work experience, licensing information, previous work preformed, client and vendor references must be evaluated.
All contractors must provide a W9
All Contractors to sign the 203K agreement
FHA 203K and 203K (s)
Merrimack Mortgage Company Inc. NMLS#2561
Work not covered by this agreement will not be required unless it is required by reasonable inference as being necessary to produce the intended result.
No additional repairs will be required unless they come up as a result of work in process.
203K contractor agreement
By executing this Agreement, the contractor represents that he/she has visited the site and understands local conditions, including state and local building regulations and conditions under which the work is to be performed.
203K contractor agreement
Owner: Unless otherwise provided for in the Agreement, the owner will secure and pay for necessary easements, exceptions from zoning requirements, or other actions which must precede the approval of a permit for this project. If owner fails to do so then the contract is void.
203K contractor agreement
If the contractor fails to correct defective work or persistently fails to carry out the work in accordance with the agreement or general provisions, the owner may order the contractor in writing to stop such work, or apart of the work, until the cause for the order has been eliminated.
203K contractor agreement
The contractor will supervise and direct the work and the work of all subcontractors.
He/she will use the best skill and attention and will be solely responsible for all construction methods and materials and for coordinating all portions of the work.
The contractor must correct promptly any work of his/her own or his/her subcontractors found to be defective or not complying with the terms of the contract
203K contractor agreement
The contractor will not employ any subcontractor to whom the owner may have
a reasonable objection
The owner will not require the contractor to employ any subcontractor to whom the contractor has a reasonable objection.
203K contractor agreement
All contractors and subcontractors will be afforded reasonable opportunity for the storage of materials and equipment by the owner and by each other.
Any costs arising by defective or ill-timed work will be borne by the responsible party.
203K contractor agreement
The contractor will maintain order and discipline among employees and will not assign anyone unfit for the task.
The contractor is responsible for, and indemnifies the Owner against, acts and omissions of employees, subcontractors and their employees, or others performing the work under this Agreement with the contractor.
203K contractor agreement
Unless otherwise specified in the Agreement, the contractor will provide for and/or pay for all labor, materials, equipment, tools, machinery, transportation, and other goods, facilities, and services necessary for the proper execution and completion of the work.
203K contractor agreement
The contractor warrants to the owner that all materials and equipment incorporated are new and that all work will be of good quality and free of defects or faults.
203K contractor agreement
The contractor will pay all sales, use and other taxes related to the work and will secure and pay for building permits and/or other permits, fees, inspections and licenses necessary for the completion of the work unless otherwise specified in the Agreement.
203K contractor agreement
The contractor will comply with all rules, regulations, laws, ordinances and orders of any public authority or HUD inspector bearing on the performance of the work.
The contractor will provide shop drawings, samples, product data or other information provided for in this Agreement, where necessary.
203K contractor agreement
Work by Owner or Other Contractors
The owner reserves the right to perform work related to the project, but which is not a part of this Agreement
The owner reserves the right to award separate contracts in connection with other portions of the project not detailed in this Agreement.
203K contractor agreement
Claims or disputes relating to the Agreement or General Provisions will be resolved by the Construction Industry Arbitration Rules of the American Arbitration Association (AAA) unless both parties mutually agree to other methods.
The notice of the demand for arbitration must be filed in writing with the other party to this Agreement and with the AAA and must be made in a reasonable time after the dispute has arisen.
The award rendered by the arbitrator(s) will be considered final and judgment may be entered upon it in accordance with applicable law in any court having jurisdiction thereof.
203K contractor agreement
The contractor will keep the owner’s residence free from waste or rubbish resulting from the work.
All waste, rubbish, tools, construction materials, and machinery will be removed promptly after completion of the work by the contractor.
203K contractor agreement
With respect to the scheduled completion of the work, time is of the essence.
If the contractor is delayed at anytime in the progress of the work by change orders, fire, labor disputes, acts of God or other causes beyond the contractor’s control, the completion schedule for the work or affected parts of the work may be extended by the same amount of time caused by the delay.
203K contractor agreement
With respect to the scheduled completion of the work, time is of the essence.
The contractor must begin work no later than 30 days after loan closing and will not cease work for more than 30 consecutive days.
203K contractor agreement
Payments may be withheld because of
◦ (1) defective work not remedied
◦ (2) failure of contractor to make proper payments to subcontractors, workers, or suppliers
◦ (3) persistent failure to carry out work in acceptance with this Agreement o with these general conditions
◦ (4) legal claims
203K contractor agreement
Final payment will be due after submission of receipts or other evidence of payment covering all subcontractors or suppliers who could file a lien.
If liens are found, final payment will be due after complete release of any and all liens arising out of the contract.
The contractor agrees to indemnify the Owner against such liens and will refund all monies including costs and reasonable attorney’s fees paid by the owner in discharging the liens.
203K contractor agreement
The contractor is responsible for initiating, maintaining, and supervising all necessary or required safety programs.
The contractor must comply with all applicable laws, regulations, ordinances, orders or laws of federal, state, county or local governments.
The contractor will indemnify the owner for all property loss or damage to the owner caused by his/her employees or his/her direct or subcontractors.
203K contractor agreement
The contractor will purchase and maintain such insurance necessary to protect from claims under workers compensation and from any damage to the owner(s) property from the conduct of this contract.
203K contractor agreement
The owner may order changes, additions or modifications (using form HUD-92577) without invalidating the contract.
Such changes must be in writing and signed by the owner and accepted by the lender.
Not all change order requests may be accepted by the lender, therefore, the contractor proceeds at his/her own risk if work is completed without an accepted change order.
203K contractor agreement
The contractor will provide a one-year warranty on all labor and materials used in the rehabilitation of the property.
This warranty must extend one year from the date of completion of the contract.
This warranty must extend for longer than one year if prescribed by law or otherwise specified by other terms of this contract.
203K contractor agreement
If the owner fails to make a payment under the terms of this Agreement, through no fault of the contractor, the contractor may, upon ten working days written notice to the owner, and if not satisfied, terminate this Agreement.
The owner will be responsible for paying the contractor for all work completed.
If the contractor fails or neglects to carry out the terms of the contract, the owner, after ten working days written notice to the contractor, may terminate this Agreement.
203K contractor agreement
Disbursement of Funds
All Rehab funds (not disbursed at closing)are placed in Escrow
Any unused funds when project is completed must be applied to reduce the balance of the mortgage or the borrower may elect to pay for any additional elective improvements or repairs to the property.
FHA 203K and 203K(s)
Merrimack Mortgage Company Inc. NMLS#2561
All rehab work must be performed by a qualified and experienced contractor, chosen by the borrower and completed in a workmanlike manner
Borrowers may not use relatives as their contractors
FHA 203K and 203K(s)
Merrimack Mortgage Company Inc. NMLS#2561
Maximum rehab amount is $35,000 for streamline This amount includes a contingency reserve and certain fees that are financeable.
(roughly $31,500 for actual work to be performed)
Merrimack Mortgage Company Inc. NMLS#2561
Program Specific RequirementsStreamline FHA 203K(s)
No more than 2 payments per specialized contractor
◦ 1st for material costs (not to exceed 50% of costs)◦ 2nd payment upon completion◦ All required permits due at 1st disbursement
No consultant, plan reviewer or specification or repairs/work write-up required on streamline
Program Specific RequirementsStreamline FHA 203K (s)
Merrimack Mortgage Company Inc. NMLS#2561
Self- Help is strongly discouraged unless applicant’s ability to completely perform the work in a timely and workman like manner is self-evident and easily documented.
Lender /Investor specific pre-approval required for self-help
Most lenders will not allow self-help
Contractors not to be related to borrowers
Program Specific RequirementsFull FHA 203K
Merrimack Mortgage Company Inc. NMLS#2561
Fee Consultant Required
Borrower must use an FHA Fee Consultant
Fee Consultant inspects the home and reviews the contractor’s proposal
Fee consultant uses the Work write up form See Exhibit B
Fee consultant analyzes the feasibility of the project and can also require additional items so the property will meet FHA standards
Merrimack Mortgage Company Inc. NMLS#2561
Program Specific Requirements Full FHA 203K
Fee Consultant Required
Base fee is $400 for repairs between $5K and $7500
Fee is $500 for repairs up to $15,000
Fee is $600 for repairs up $30,000
Fee is $700 for repairs up to $50,000
Fee is $800 for repairs up to $75,000
Fee is $900 for repairs up to $100,000
Fee is $1000 for repairs over $100,000
Merrimack Mortgage Company Inc. NMLS#2561
Program Specific Requirements Full FHA 203K
What can the listing agent do when the house needs repairs/renovations?
What can the buyer agent do when the house needs repairs/renovations?
FHA 203K or 203Ks Discussion
Merrimack Mortgage Company Inc. NMLS#2561
Lets talk about RD now…
Also known as USDA Farmer’s Home Rural Development
Merrimack Mortgage Company Inc. NMLS#2561
Rural Development
For RD eligible buyers and properties only
Income Limits Apply
Geographical Limitations Apply
Single Family and Condo only
Owner Occupied only
Rural Development
Merrimack Mortgage Company Inc. NMLS#2561
Rolling Improvements into LoanRD may allow up to $6,650 to be rolled into the loan for repairs to be done after closing
◦ The actual repair + 50% contingency must be put into loan
◦ If repair is $6,550 then $6650 X 150% = $9975 is rolled in
◦ The house must appraise for $9975 above the sales price to escrow the max
◦ The amount of escrow is limited to $10,000 or
◦ The amount of escrow is limited to the difference between appraised value and sales price (but never to exceed$10K)
Rural Development
Rolling improvements into loan
1. Identify needed repair
2. Contractor gets bid to complete work no more than $6,650
3. Rehab escrow account will be 150% of the bid $6,650 X 150% =$9,975 (cannot exceed $10,000)
4. House must appraise for sales price + rehab escrow amount
5. Loan Amount is increased by the amountof rehab escrow if appraisal allows
Merrimack Mortgage Company Inc. NMLS#2561
Rural Development
RD has limited options for repairs/rehab
Negotiate for seller to complete repairs prior to closing
Increase loan to include repairs
Escrow for repairs to be completed after closing
Combine with NH Housing to get rehab option
Rural Development
Merrimack Mortgage Company Inc. NMLS#2561
Escrowing for improvements
1. Identify needed repair
2. Contractor gets bid to complete work no more than $6,650
3. Rehab escrow account will be 150% of the bid $6,650 X 150% = $9,975 (cannot exceed $10,000)
4. House must appraise for sales price only
5. Buyer or Seller can put the money up to establish the escrow account
Merrimack Mortgage Company Inc. NMLS#2561
Rural Development
RD Options on Required Repairs
Financing a Repair Escrowing for a repair
$175,000 house needs a new roof & cost is $6500
If house appraises for $185,000 then the loan can be increased to $184,975
$6500 is available for repair
$3250 contingency Any left over funds after
work is 100% complete will be applied to loan balance
$175,000 house needs a new roof & cost is $6500
House appraises for $175K Buyer or seller or
combination of both can escrow $9750 ($6500 X 150%) and complete the repair after closing
$3250 contingency Any left over funds after
work is 100% complete will be applied to loan balance
Merrimack Mortgage Company Inc. NMLS#2561
Repairs completed before closing
Repairs completed after closing◦Repairs rolled into loan◦Buyer or seller escrows
Combine with NH Housing
Questions on RD?
New Hampshire Housing Finance Authority
Not limited to 1st time buyers
Income Limits Apply
Flex Programs offer rehab options
NH Housing
New Hampshire Housing Finance Authority
Basic FHA 203Ks guidelines apply
Contractor requirements same as 203Ks
Rehab options exist combining with either FHA or RD
NH Housing
NH Housing Options
Combine with RD Combine with FHA
$35,000 max Includes 10%
contingency Must meet geographical
restrictions Same general
guidelines as FHA 203Ks House must appraise for
acquisition cost
$35,000 max Includes 10% contingency No geographical
restrictions Same general guidelines
as FHA 203Ks House must appraise for
acquisition cost
Merrimack Mortgage Company Inc. NMLS#2561
NH Housing Options Combine with RD Combine with FHA
Water Quality Test required
Dug Wells require water flow test
No in-law apartments Single family 1-unit
only No Post & Pier
foundations
Water Quality Test required
Generally for single family only but exceptions can be made case to case on 2-4 unit properties when repairs are minor
Merrimack Mortgage Company Inc. NMLS#2561
NH Housing Options
Combine with RD Combine with FHA
3% down payment Seller can pay all closing
costs up to 6% of sales price
Lower mortgage insurance results in lower payment
May be able to use 3% cash assistance
May be eligible for MCC(Mortgage Credit Certificates - homebuyer tax credit)
3.5% down payment Seller can pay all closing
costs up to 6% of sales price
Higher mortgage insuranceresults in higher payment
May be able to use 3% cash assistance
May be eligible for MCC(Mortgage Credit Certificates – homebuyer tax credit)
Merrimack Mortgage Company Inc. NMLS#2561
NH Housing Options
Combine with RD Combine with FHA
50% max debt ratio ◦ Must run successfully
through GUS◦ GUS is RD’s automated
underwriting system
Lower debt ratios for loans that do not run succesffully thru GUS
50% max debt ratio◦ Must run successfully through
LP or DU LP = Freddie Mac’s automated
underwriting system DU = Fannie Mae’s automated
underwriting system Lower debt ratios for loans
that do not run successfully thru automated underwriting
Merrimack Mortgage Company Inc. NMLS#2561
NH Housing Options
Combine with RD Combine with FHA
Must use household income
Must meet both RD and NH Housing income limits(whichever is less)
Use income of buyers on the loan only
Merrimack Mortgage Company Inc. NMLS#2561
Questions? Comments?
www.goNewHamphsireHousing.com
NH Housing Finance Authority
Fannie May Home Style
Fannie Mae Homepath being discontinued
Bank & Credit Union Product
Conventional Options
Merrimack Mortgage Company Inc. NMLS#2561
Available for purchase or refinance
No minimum repair limit
No maximum repair
Structural repairs allowed
Maximum loan amount of $417,000
Fannie Mae Home Stylestreamline renovation financing
Merrimack Mortgage Company Inc. NMLS#2561
No more than 3 contractors
“Self Help” NOT allowed
Contracts must include labor & material
Contracts must describe the scope of work◦ Broken down by specific room/area◦ Break down material & labor costs by specific
area◦ Name licensed sub=contractors
Fannie Mae Home Stylestreamline renovation financing
Merrimack Mortgage Company Inc. NMLS#2561
Owner Occupied Purchases
5% down Single Family 620 score
15% down2-family home 660 score
25% down3-4 family home 680 score
◦ 3-4 units must be self sufficient◦ Rents must equal or exceed mortgage payment
Fannie Mae Home Stylestreamline renovation financing
Merrimack Mortgage Company Inc. NMLS#2561
2nd Homes/Vacation Home Purchase◦ 10% down required◦ 620 credit score ◦ Limited to single family homes
Investor single family purchase◦ 15% down required◦ 1-unit properties only◦ 620 score◦ Some lenders finance 2-4 unit investor
Fannie Mae Home Stylestreamline renovation financing
Merrimack Mortgage Company Inc. NMLS#2561
Qualifying Criteria
Minimum credit scores apply
Automated Underwriting
◦ Fannie Mae’s DU◦ DU = Desktop Underwriter
Residual income required based on family size and loan amount
Fannie Mae Home StyleStreamline renovation financing
Merrimack Mortgage Company Inc. NMLS#2561
Seller concessions allowed ◦ 3% seller concession on owner occupied 5% down◦ 6% seller concession on owner occupied 10% +
down◦ 2% seller concession on investment purchases
No cash back on refinances
Fannie Mae Home Stylestreamline renovation financing
Merrimack Mortgage Company Inc. NMLS#2561
Disbursing Funds
No disbursement at closing◦ Negotiate required deposits with contractor upfront◦ Buyer must give contractor deposits
from Buyers’ own funds
2 disbursements allowed◦ Midpoint disbursement
Appraiser determines percentage of work completed Permits must be in place
◦ Final Disbursement
Fannie Mae Home Stylestreamline renovation financing
Merrimack Mortgage Company Inc. NMLS#2561
Disbursing Funds
Work must be completed within 6 months
10% contingency can be used to offset unexpected costs if properly documented
Unused funds reduce the balance of the loan
Fannie Mae Home Stylestreamline renovation financing
Merrimack Mortgage Company Inc. NMLS#2561
Fannie Mae Home Stylestreamline renovation financing
Merrimack Mortgage Company Inc. NMLS#2561
Questions? Comments?
What is a HUD Home?
A HUD Home is a home that had been financed by FHA and was foreclosed upon.
HUD now owns the home and is marketing it for sale
These listings are in MLS
HUD Homes
HUD Homes
When you find a listing in MLS that is HUD Home
go to www.HUDhomestore.com
Locate the listing on the HUDhomestore site
Merrimack Mortgage Company Inc. NMLS#2561
HUD Homes
www.HUDhomestore.com
Click on case # to get more info on listing
Look for codes:IN = insurable with another FHA loanIE = insurable with another FHA loan but the borrower will have to escrow funds to complete required repairs after closingUI = uninsurable with an FHA loan; borrower can use an FHA 203K or 203Ks to obtain funds to complete needed repairs after closing.
Merrimack Mortgage Company Inc. NMLS#2561
Property Condition Report is on file atHUDhomestore.com
Click on Sales & Escrow Notes
Make sure borrower can qualify for the type of loan needed to close on HUD home
HUD Homes
Merrimack Mortgage Company Inc. NMLS#2561
www.HUDhomestore.com
Register as Bidder◦ Enter your principal broker’s NAID #◦ create a user name & password◦ provide your contact info
Submit Offers for your buyers!
HUD Homes
Merrimack Mortgage Company Inc. NMLS#2561
Appraisal is on file & can be used by lender
◦ Cannot be more than 120 days old at time of closing
◦ Appraiser must be willing to work with lender
◦ Lender can request appraisal updates/clarifications
◦ Lender can add property conditions
HUD Homes
Merrimack Mortgage Company Inc. NMLS#2561
Lender required minimum standards
All major systems must be functioning properly- Plumbing- including availability of hot water- Electrical systems- Roof & basic structure - Heating system
Any deficiencies will need to be corrected ◦ prior to closing ◦ establish escrow to repair after closing◦ use rehab loan to repair after closing
For the Listing Agent
Merrimack Mortgage Company Inc. NMLS#2561
Lender required minimum standards
no peeling exterior paint or exposed wood or obvious rot on exterior wood
Broken windows and holes in walls must be repaired
Safety issues must be addressed
Have a checklist of typical red flags
Any deficiencies will need to be corrected ◦ prior to closing ◦ establish escrow to repair after closing◦ use rehab loan to repair after closing
For the Listing Agent
Merrimack Mortgage Company Inc. NMLS#2561
Discuss completing repairs before the home inspection & appraisal
Completing repairs in advance could translate to a higher sales price or a more marketable property
If the seller has equity in the home but no cash to complete repairs then a renovation loan may allow them to upgrade deficiencies and yield a higher sales price.
For the Listing Agent
Merrimack Mortgage Company Inc. NMLS#2561
RD requires a refrigerator in the home
RD accepts dug wells that flow at 3-5 gallons per minute for a minimum of 3 hours
For the Listing Agent
Merrimack Mortgage Company Inc. NMLS#2561
If you have doubt whether the house will pass an FHA or RD inspection, talk to your lender
Consider having seller do home inspectionto identify needed repairs
Consider having a contractor look at the house to bid on required repairs
For the Listing Agent
Merrimack Mortgage Company Inc. NMLS#2561
Use checklist to identify potential problems
Be aware of typical lender required repairs
Have the buyer communicate with the lender to assure that the borrower can qualify for a rehab program
Have buyer communicate with the lender to assure they have a complete understanding of how these programs work
For the Buyers’ Agent
Merrimack Mortgage Company Inc. NMLS#2561
P&S Considerations◦ Allow extra time for Financing Contingency◦ Allow extra time for Closing◦ Negotiate for repairs to be completed by the Seller.◦ Negotiate Seller Contributions
Access to the property◦ contractors need to get into the house◦ will Seller allow unescorted access by contractors◦ Are you able to meet all contractors at the property
For The Buyers’ Agent
Merrimack Mortgage Company Inc. NMLS#2561
Have your clients work with their lender to determine the best products and time frame their individual situation.
When you need a REHAB loan
Pick up the Phone and Call(603) 225-LOAN (5626)
For the Buyers’ Agent
Merrimack Mortgage Company Inc NMLS 2561
109
Licensed by the New Hampshire Banking Department MA Lender License #MC 2561 The information in this presentation is Accurate as of
the date of publishing. Information, terms and conditions are subject to change without notice.
Always Check with Financial Advisors for Tax information.
This is not an extension of credit or a commitment to lend. Subject to Underwriting approval
Merrimack Mortgage Company Inc. NMLS#2561
9/18/2013
Merrimack Mortgage Company
Gonewhampshirehousing.com
The following slides are taken directly from a course required by NH Housing when buyers use NH Housing rehab programs …