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

203 K St 203 K St 203 K Streamline 203 K Streamline li li 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 of updating of 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 First Time Homebuyers First Time Homebuyers Fi Ti Ti H H b b  Credit score challenges and lack of down Credit score challenges and lack of down payment funds for first time buyers make payment funds for first time buyers make t f t f d d f f fi fi t ti t ti b b k k 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  The repair program permits homebuyers to Th The repair program permits homebuyers to Th i i i i h h b b do up to approximately $30K in repairs to a do up to approximately $30K in repairs to a p p property and provides the funds for the property and provides the funds for the p p y y p 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 3 5 % D 3.5 % Down Payment 3.5 % Down Payment P P t t  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 th the loan amount and improvements the loan amount and improvements l l t t d i d i t t

Eligible Properties Eligible Properties Eligible Properties Eligible Properties  Single Family and PUD Single Family and PUD  2-4 Unit properties  2 4 Unit properties 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 d demolished, including the foundation demolished, including the foundation li h d i li h d i l di l di th th f f d ti d ti

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 p g 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 When to use When to use continued 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 y p p p y 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 they had some T.L.C. they had some T.L.C. h h h d h d C C

Standard 203k vs. Standard 203k vs. Streamlined 203k Streamlined 203k  1 General Contractor 1 General Contractor  2- -3 Specialized 3 Specialized  Consultant required Consultant required Contractors Contractors  Larger more complex Larger more complex Larger more complex Larger more complex  Simple, single contract Si Simple, single contract Si l l i i l l t t t t project project jobs jobs  Additions, Structural Additions, Structural  Repair, Replace,  Repair, Replace, Repair, Replace, Repair, Replace, OK OK Upgrade only Upgrade only  $5,000 Minimum/No $5,000 Minimum/No  No Consultant No Consultant Maximum Maximum  $5K minimum/$30,000 $5K minimum/$30,000  Detailed work write up Detailed work write up Maximum Maximum  4- -5 draw requests 5 draw requests  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  Fast Closings F Fast Closings – If ducks are in a row F t Cl t Cl i i If d If d If ducks are in a row k k i i 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