203K Renovation

Regular program Streamline program Purchases Refinances Owner Occupied Only

Regular

Minimum $5000 Requires a consultant Work must be started in 30 days No lapses of work for more than 30 days Work must be complete within 6 monthsexceptions may be allowed Generally no more than 5 inspections Contingency reserve required

Streamline

No minimum $35,000 maximum (update fees and contingency reserve included) No consultant involved Contingency reserve at discretion of UW No extensions for 6 month completion of work Must occupy within 30 days Specialized contractors required-Limit 3 w/2 payouts (GC required if above 3 Specialized contractors) Contractors may receive up to 50% of estimated cost of work at the discretion of the underwriter

Eligible Property

1-4 Family completed for at least 1 year Conversion of multi-unit dwelling decreasing the number of units Conversion of single family dwelling increasing the number of units A complete rehab as long as the entire foundation system remains in place Condos-no structural work

Ineligible Property

Homes completed for less than 1 year Homes that have never been completed Cooperative units Non-owner occupied Non-profit companies

Eligible Improvements Regular Program

Additions to current structure Changes for improved functions and modernization (such as remodeling of kitchens and bathrooms) Elimination of health and safety hazards such as lead paint Changes for aesthetic appeal and elimination of obsolescence (new exterior siding Replacement or reconditioning of any systems (ie plumbing, heating, etc) Connection to public water or sewer

Eligible Improvements (continued)

Flooring, tiling and carpeting Energy improvements Major landscape work (ie patios that improve the value equal to the dollar spent) Handicap accessibility Roofing, gutters, downspouts New appliances (used are not allowed) Construction or rehab of detached structure

Ineligible Improvements Regular

BBQ Pits Bathhouses Dumbwaiters Exterior hot tubs Saunas, spas and whirlpool baths Outdoor fireplaces or hearths Swimming pools TV antennas and satellite dishes Tennis courts Additions/repairs for commercial use

Eligible Improvements Streamline program (continued)

Repair/replacement of roofs, gutters and downspouts Repair/replacement/upgrade of HVAC systems Repair/replacement/upgrade of plumbing and electrical systems Repair/replacement of flooring Painting, both exterior and interior Weatherization, including storm windows, doors, etc Purchase/installation of new appliances

Eligible Improvements Streamline

Basement remodeling which does not involve structural repairs Basement waterproofing Window and replacements and exterior wall re-siding Well/septic repair or replacement

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Ineligible Improvements Streamline program

Major rehab or remodeling New construction (including room additions) Repair of structural damage Repairs requiring detailed drawings or architectural exhibits Landscaping or similar site improvements Any repair/improvement requiring a work schedule longer than 6 months Any repairs/improvements that require more than 2 payments per specialized contractor Repair/improvements that would not allow borrower to live in property within 30 days

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Other Program Guidelines

REO property can be done on either program (1 unit properties only for streamline and 15% contingency reserve required on streamline program) No Borrower Self Help Cant be combined with $100 down Can be combined with an EEM

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FHA Connection

Loan must be identified as a 203K Construction Code is entered as Substantial Rehabilitation Do not use streamlined for the refinance type Consultants ID number must be input on a regular 203K Enter 203KS in the Consultant ID field for the streamline program

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Contractors

Selected by borrower Reviewed by L1FC Must be specialized on the 203K streamline program Should be given handout as to how the 203K program works

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Draws

Administered by L1FC or Investor No specific time line Signed by borrower, contractor and consultant Date down and inspection required Mailed (overnight) to the borrower

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Documentation

All normal FHA 203b disclosures plus Work Write-up from Consultant (regular) Maximum Mortgage Worksheet Draw Request Template (HUD 9746A) completed by consultant (regular) or contractors (streamline) Borrowers Identity of Interest Consultants Identity of Interest

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Documentation (continued)

As is Appraisal (for HUD-REO property only) Subject-to (after-improved) appraisal on all other 203ks Homeowner/Contractor Agreement Contractors screening 203k Borrowers Acknowledgement Contractor Resume

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Time Frames

Contractor Information-1 week prior to closing Hazard Insurance-1 week prior to closing if PITI is not financed Hazard Insurance-10 business days prior to closing if PITI is being financed Renovation Review-48 hours after final approval Fee Sheets-72 hours prior to closing in order to meet the time frames for renovation review

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Fees

$68 Tax Related Service Fee (cannot be paid by borrower) $15 Flood Fee Supplemental Origination to L1FC or Investor (the greater of $350 or 1.5% of the cost of repairs)

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Originating a 203k

Take Application Pre qualify borrower Once property is found involve a consultant Hire Contractor Order after-improved (subject-to appraisal) and give appraiser the work write-up Close loan

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Maximum Mortgage Worksheet

Must match Transmittal (formerly known as MACAW) LO to go through figures with borrower Borrower to sign at closing Software systems Can be used to disclose costs associated with the loan

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Worksheet
Contingency Reserve

Generally 10% If utilities are off, use 15% Set by Underwriter Leftover reserve must be applied to principle on a streamline program Leftover reserve can be used to do additional work or applied to principle on a regular program

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Worksheet
Calculations

Use standard 203b LTV factors Properties owned less than a year must be calculated using lowest sales price within 12 months on a regular program Borrower still required to have their own 3.5% statutory investment (Based off of purchase plus repairs and not just purchase price)

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Worksheet
Mortgage Payments

Up to 5 months Only allowed on a regular program Property must be uninhabitable

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The 203k Worksheet

203(k) and Streamlined 203(k) Maximum Mortgage Worksheet HUD-92700

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Section A Borrower and Property Info

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Section A Borrower and Property Info

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Section B Rehab and Other Costs

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Section B Rehab and Other Costs

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Section C Purchase Calculation

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Section C Purchase Calculation

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Section A Borrower and Property Info Refinance

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Section A Borrower and Property Info Refinance

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Section B Rehab and Other Costs Refinance

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Section B Rehab and Other Costs - Refinance

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Section C Purchase Calculation Refinance

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Section C Purchase Calculation - Refinance

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Section D Refinance Calculation

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