Shocking News!!!National Foreclosure Epidemic Continues

Mortgage giants tighten rules

The Black Hole We Are In Together

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What You Should Know

2 Types of 203k’s

Streamlined: The 203k Streamline is used for homes that needminor repairs. It has no minimum repair costs but has a cap of$35,000.

Standard: The Standard 203k is used for homes that need majorrehabilitation. There must be at least $5000 worth of repairs andloan limits are based on property type and location.We will discuss both of these loans in detail but first….

…….let’s discuss the 203K process from Start to Finish

The 203K Process Includes these Steps:

1) Find a Property/Make the Offer

2) Find a FHA approved Lender 3) Appraise the Property 4) Loan is Approved and Closed 5) Work Begins on Property 6) Disbursements & Payment

Eligible Properties (for both Streamline and Standard loans)

1-4 Family Completed for One Year

Can be used to convert from 1, 2-3-4 unit lender specific

Multi-unit can be converted to single family

Special Requirements for Condominiums

Must be owner occupied Rehab is limited to the interior only The maximum amount of the loan can not

exceed 100 percent of after-improved value

Eligible Improvements

Major rehabilitation remodeling, such as the relocation of aload-bearing wall

New construction (including room additions) Repair of structural damage Landscaping or similar site amenity improvements, including fence Any repair or improvement requiring a work schedule longer

than six (6) months; -or Rehabilitation activities that require more than two (2) payments per specialized contractor-Repairs requiring detailed drawings plans or architectural exhibits,or require a plan reviewer.

Result in work not starting within 30 days after loan closing; orcause the mortgagor to be displaced from the property for morethan 30 days during the time the rehabilitation work is being conducted.(FHA anticipates that, in a typical case, the mortgagorwould be able to occupy the property after mortgage loan closing).

Ineligible Improvements

Contractor Requirements

Borrowers must use licensed/insured contractors to complete rehab

(Sorry No Exceptions)

We have approved Contractors available

Timelines and Disbursements

When Loan Closes You Get Paid $$$$ Required to bring cookies to Scott Disbursements

FHA Approved Consultants All Standard 203K loans must use a

FHA Approved 203(k) consultant Eligible Improvements

A. Structural alterations and reconstruction

B. Changes for improved functions and modernization

Repairs cannot exceed 50% of completed appraised value

Features of the Standard 203K

Full Blown

Eligible Improvements

Elimination of health and safety hazards Changes for aesthetic appeal and elimination

of obsolescence Reconditioning or replacement of plumbing Installation of well and/or septic system. Roofing, gutters and downspouts Flooring, tiling and carpeting Energy conservation improvements Major landscape work and site improvement Improvements for accessibility for a disabled person

Timelines, Disbursements and

Inspections When the loan closes Disbursements A ten (10) percent holdback

1) Used as an incentive 2) Required on FHA 203(k) 3) Required on properties older than 30 4) A minimum of 10% of the cost

FHA 203k Streamline (NON-HUD)

• Borrower must have 3.5% into the deal

• Seller-paids up to 3% of Purchase Price For now

• Total Loan amount is:

Purchase price + Repairs = Total Loan up to 110%

• Loan amount can go up to 110% of appraised value!

• Repairs must be done by a Licensed approved Builder (No Exceptions)

• We have approved builders both FHA and Treadstone!