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Introduction to Fannie Mae’s:HomeStyle® Renovation Mortgage

July 2020

©2019 Genworth Financial, Inc. All rights reserved.

Customer EducationBrought to you by: Genworth Customer Development and Process Consulting

The HomeStyle Renovation mortgage provides a convenient and flexible way for borrowers considering home improvements to make repairs and renovations with a first mortgage, rather than a second mortgage, home equity line of credit, or other more costly methods of financing.

HomeStyle® Renovation Mortgage

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NOTE: Lender approval is required to deliver HomeStyle Renovation loans to Fannie Mae prior to completion of the work. Lenders must have two years of direct experience originating and servicing renovation mortgages within the past five years, and meet certain financial capacity and operational requirements. See Selling Guide B5-3.2-01: HomeStyle Renovation Mortgage: Lender Eligibility for details, and contact your Fannie Mae customer delivery team for assistance.

https://www.fanniemae.com/content/faq/homestyle-renovation-faqs.pdf

Fannie Mae COVID-19 SEB Updates.Fannie Mae LL-2020-03 updated from original issuance‏

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https://singlefamily.fanniemae.com/media/22316/display

Purchase Limited Cash Out Refinance (LCOR)

Loan Purpose

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15 and 30-year Fixed Rate Mortgage (FRM) All Eligible Adjustable Rate Mortgage (ARM) Products

Loan Type/Term

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One- to Four-Unit Principle Residences, One-Unit Second Homes, or One-Unit Investment Properties. Including units in condos, co-ops, and PUDs.

Manufactured Housing (MH) is Eligible, eligible funds capped at the lesser of $50,000 or 50% of the “as-completed” appraised value.

Maximum Renovation Costs: Purchase- Limited to 75% of the lessor of the purchase price plus renovation

costs, or the “as-completed” appraised value Refinance- Limited to 75% of the “as-completed” appraised value

Any Type or renovation or repair is eligible when it is permanently affixed to the property. Renovations should be completed within a 12-month period from the date the mortgage is delivered.

Property and Renovation Eligibility

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Automated Underwriting with Desktop Underwriter (DU) orManual Underwriting

Underwriting

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For properties underwritten Manually, Credit Score and other Factors will determine LTVs. Refer to Fannie Mae’s Eligibility Matrix

Eligibility Matrix- Manual Underwriting

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https://www.fanniemae.com/content/eligibility_information/eligibility-matrix.pdf

Purchase Transactions Loan-To-Value (LTV) is based on the lessor of 1) Purchase Price and Cost of

Renovation, or 2) the “As Completed” Appraised ValueRefinance Transactions LTV is determined by dividing the Original Loan Amount by the “As

Completed” Appraised Value

MH is Eligible, eligible funds capped at the lesser of $50,000 or 50% of the “as-completed” appraised value.

Borrower may Not Receive Cash Back at Closing In Any Amount See Worksheet Form 1035 on next slide

Calculating the LTV and Maximum Loan Amount

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HomeStyle® Renovation Maximum Mortgage Worksheet – Form 1035

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https://www.fanniemae.com/content/guide_form/1035.pdf

One-Unit Principle Residence to 97*% LTV/CLTV/HCLTV with FRM Purchase Transactions with LTVs greater than 95% at least **one borrower

must be a first-time buyer unless combined with HomeReady® LCOR Transactions with LTVs greater than 95% the loan must be owned or

securitized by Fannie Mae One-Unit Principle Residence to 95*% LTV/CLTV/HCLTV with ARM Two-Unit Principle Residence to 85*% LTV/CLTV/HCLTV with

FRM/ARM Three and Four-Unit Principle Residence to 75*% LTV/CLTV/HCLTV

with FRM/ARM MH LTV/CLTV/HCLTV on Principle Residence to 95% with FRM/ARM Second Homes to 90% FRM/ARM (105% CLTV is not permitted with

Community Seconds.

Maximum LTV’s at Origination Using DU

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*Borrowers may qualify for up to 105% CLTV with eligible Community Seconds®

**When ALL occupying borrowers are first-time homebuyers, at least one borrower must complete the Framework® online education program

One-Unit Second Homes to 90*% LTV/CLTV/HCLTV with FRM/ARM One-Unit Investment Properties Purchase Transactions up to 85% LTV/CLTV/HCLTV with FRM/ARM LCOR up to 75% LTV/CLTV/HCLTV with FRM/ARM

Maximum LTV’s at Origination Using DU

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For properties underwritten Manually, Credit Score and other Factors will determine LTVs. Refer to Fannie Mae’s Eligibility Matrix

Borrower Must Choose A Contractor to Perform the Renovation Contractors must be licensed only when required by state law.

Lender Must Review the Contractor’s Qualifications Fannie Mae’s Contractor Profile Report Form 1202 may be used.

Borrowers Must have a Construction Contract with their Contractor Fannie Mae’s model Construction Contract Form 3734 may be used.

Plans and Specifications Must be prepared by a Registered, Licensed, or Certified General Contractor, Renovation Consultant, or Architect. The Plans and Specifications should: Fully describe all of the work to be done Identify when Stages of Completion are Scheduled including the Start and

Completion Dates

Contractors

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Forms 1202 and 1204

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https://www.fanniemae.com/content/guide_form/1204.pdfhttps://www.fanniemae.com/content/guide_form/1202.pdf

Borrowers Can Perform the Renovation Work Themselves At the Lenders Discretion, Provided That: The Do-It-Yourself financing does Not exceed 10% of the as

completed value. The Property is a One-Unit Owner-Occupied Home, and is Not a MH. The Reimbursement is Limited to the Cost of Materials or the Cost

of Properly Documented Contract Labor. Sweat Equity May Not Be Reimbursed.

Borrower “Do-It-Yourself” Work

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Renovation Costs and Reserves

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Lender May Advance Funds up to 50% of the Cost of Materials any time after closing to secure necessary supplies for the project. Renovation Costs May Include: Labor and Materials Soft Costs (architect fees, permits, licenses) Contingency Reserve. Optional unless the property is a 2-4-Unit. The required contingency Reserve for a 2-to 4-unit property is 10% of the

Hard and Soft Renovation Costs. It may be financed. A Payment Reserve of up to 6 months PITIA is permitted when the

borrower must vacate the property during renovation.

HomeStyle® Renovation FAQ’s

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https://www.fanniemae.com/content/faq/homestyle-renovation-faqs.pdf

If Mortgage Insurance is required it must be in place before closing

Mortgage Insurance

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https://new-content.mortgageinsurance.genworth.com/documents/national/underwriting-guidelines/12659881.Underwriting.Manual.080519.pdf

Genworth Underwriting Guidelines

Genworth Rate Express®

LOS Connections

Training Tools and Information

Training Tools and Information

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Additional MI Site Information

ActionCenter®: 800 444.5664

Your Local Genworth Regional Underwriter

Your Genworth Sales Representative

Your Genworth Resources

Legal Disclaimer Genworth Mortgage Insurance is happy to provide you with these training materials. While we strive for‏accuracy, we also know that any discussion of laws and their application to particular facts is subject to individual interpretation, change, and other uncertainties. Our training is not intended as legal advice, and is not a substitute for advice of counsel. You should always check with your own legal advisors for interpretations of legal and compliance principles applicable to your business.

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Collateral Underwriter®, Home Ready® and Desktop Underwriter® or DU® are registered trademarks of Fannie MaeLoan Product Advisor®, Home Possible®, Loan Collateral Advisor® and Home Value Explorer® (HVE®) are registered trademarks of Freddie MacActionCenter®, Homebuyer Privileges® and Rate Express® are registered trademarks of Genworth Mortgage InsuranceSimply UnderwriteSM is a registered service mark of Genworth Mortgage Insurance