10/5/2015. Homebuyers: Can purchase homes in less than ideal condition (as is) and address the problems immediately after closing.

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1 Understanding the benefits and process of a Residential Renovation Loan for Realtors Renovation financing allows a borrower to Purchase or Refinance a home in less than ideal condition and make the improvements immediately after closing. A Sale may close with some or NONE of the Utilities/Systems on prior to closing!! The cost of the renovation is rolled typically into a 30 year mortgage making it very affordable. Homebuyers: Can purchase homes in less than ideal condition (as is) and address the problems immediately after closing. Homeowners: May upgrade/modernize or expand to increase value ( to stay in or list for resale) Love it or List it!. Equity loans are very hard to get and credit cards are too expensive. 1

2 Real Estate agents: Sell dated and properties needing repairs by helping potential buyers envisioning remodeling possibilities.. Sell a Vision what it could be, not what it is. Let the buyer create their Dream Home now. Negative Listing notes: REO s, Short Sales, HUD properties, as is, cash only, CO responsibility of buyer. All can be financed with a Renovation loan easily. Second Home owners and buyers: Can take advantage of the program. Investors can purchase homes in need of repairs, not limiting them to pay cash (this makes it possible for you to sell more units to an Investor freeing up capital to make multiple sales). They can also upgrade a property they own for increased rent rolls or to list for resale. When Selling or Listing a property where the need for repairs is obvious When you have an Appraisal with repair conditions subject to final inspection, prior to closing. When you want to sell Vision! 2

3 e appraiser The appraiser must use must their use good their judgment not to good judgment when recommend identifying MPR deficiencies inspec ons that only require as repair. a means Per HUD of limi ng liability. e reason or Appraisal indication Handbook of a particular problem Appraisers are reminded not must be given to recommend when requiring inspections an inspection of any mechanical only system, as a means structural of limiting system, etc. liability. The reason or indication of a particular problem must be given when requiring an inspection of any mechanical system, structural system, etc. Structure Missing siding (structure open to elements) Damaged/missing attached garage door (security- possible unobserved entry to home Bowing, crumbling foundation (structure compromised -recommend inspection) Significant foundation cracks (Do not list minor above grade typical step cracks) Missing or broken windows (security safety) AZ and NV require reglazing Any exposed sub flooring (hardwood flooring is a floor covering) Missing kitchen base cabinets and counter tops as required accommodate sink and plumbing fixtures (lower base cabinetry only) 3

4 Security bar removal (if no release latch is found)(lf latches present appraiser must comment) Grading/drainage issues (standing water against the foundation or obvious grade issues) Dampness/standing water in basement or crawlspace (indicate cost to remediate standing water) determine source if possible Mold like substances ( Remediate as needed) LIST OF COMMON mpr repairs Missing exterior doors or exterior doors that cannot be properly secured (excluding storm Missing doors) exterior doors or exterior doors that cannot be properly secured (excluding storm doors) Damaged interior walls (larger areas or damaged walls that exmissing exterior doors or exterior Damaged doors that cannot interior be walls properly (larger secured areas (excluding or damaged storm doors) Damaged interior walls walls that (larger expose areas or mechanical damaged walls systems that expose (do mechanical not systems (do not include minor damage to drywall) Major cracks in walls include floors minor foundation damage that to indicate drywall) more than typical settlement or possible major structural issues Removal cost for Major non conforming cracks in second walls kitchen floors in single or foundation family homethat pose mechanical indicate systems (do more not include than typical minor damage settlement to drywall) or Major cracks in walls floors or foundation that indicate more than typical settlement or possible major major structural structural issues issues Removal cost for non conforming second kitchen in single family home Removal cost for non conforming second kitchen in single family home Roof Leaking roof- Any evidence of water leak (prior and/or current)(if roof appears in good condition recommend inspection) Visibly worn or curling shingles- roof at end of useful life -no less than 2 years- (no more than 3 layers) Fascia- Missing, damaged, rotting (exposure to elements) 4

5 Gutters- Loose or Missing (possible drainage issues) Downspouts- Loose damaged or missing- possible drainage issues Plumbing Burst, missing, severed/frozen lines, Low pressure, no pressure (PCR or appraisers observation) Major leaks Missing sink(s) Missing water heater Damaged relief valve(s) (water heater) Damaged or missing sink and tub fixtures, Electrical Missing switch and outlet cover plates- (exposure to electrical contact) Non-working outlets -as indicated by the PCR Exposed/severed wires that are not capped (capped but hanging and exposed wires should be reported to the FSM) Missing /Damaged electrical service panel Missing/damaged electrical service meter 5

6 HVAC Inoperable Furnace Repair or replace as needed (if inoperable due to missing thermostat, cost to replace thermostat if furnace appears in good condition make the extraordinary assumption that with the thermostat repair the furnace is operational Missing furnace -Replace as needed Missing/damaged thermostat Missing or damaged Duct work Missing vent registers (wall or floor vents) Boilers that were not tested by FSM due to water shut off must be inspected for safe operation. (recommend inspection) Missing boiler supply or return lines. Missing air conditioning units may be a repair item in some contract areas with warmer climates while some contract areas consider them a luxury item. Contact your appraisal specialist for guidance 6

7 Misc Evidence of hazardous material on or in the improvements Evidence of underground storage tanks 1970 s FHA 203k (Full) 1990 s Fannie Mae HomePath & HomeStyle 2000 s FHA 203k Streamline..HHistory of the programs 1970 s FHA 203k 1990 s Fannie Mae HomePath & HomeStyle 2000 s FHA 203k Streamline Most mortgage financing plans provide only permanent financing. That is, the lender will not usually close the loan and release the mortgage proceeds unless the condition and value of the property provide adequate loan security. 7

8 Most mortgage financing plans provide only Most mortgage When rehabilitation is involved, financing plans provide only permanent financing. That is, the lender will not this usually means close that the a loan lender and release typically the mortgage proceeds unless requires the condition the improvements and value of the to property be provide adequate finished loan before security.ge a long term financing plans provide only permanent financing. That is, the lender will not usually close the loan and mortgage release the mortgage is made. proceeds This is unless an issue the condition and often value especially of the property on provide an As Is adequate loan security. Contract. financing. That is, the lender will not usually close the loan and release the mortgage proceeds unless the condition and value of the property provide adequate loan security. When a homebuyer wants to purchase a house in need of repair or modernization, the homebuyer usually has to obtain financing first to purchase the dwelling; additional financing to do the rehabilitation construction; and a permanent mortgage when the work is completed to pay off the interim loans with a permanent mortgage. Often the interim financing (the acquisition and construction loans) involves relatively high interest rates and relatively short amortization periods. The Section 203(k) program was designed to address this situation. 8

9 The borrower can get just one mortgage loan, at a long term fixed (or adjustable) rate, to finance both the acquisition and the rehabilitation of the property. To provide funds for the rehabilitation, the mortgage amount is based on the projected value of the property with the work completed, taking into account the cost of the work. ELIGIBLE PROPERTY. To be eligible, the property must be a one to four family dwelling that has been completed for at least one year. The number of units on the site must be acceptable according to the provisions of local zoning requirements. Homes that have never been completed cannot be accepted into the 203(k) program; construction of the property must have been completed for at least one year. Evidence of completion would be a Certificate of Occupancy or other similar documentation from the local jurisdiction. 9

10 Homes that have been demolished, or will be razed as part of the rehabilitation work, are eligible provided the existing foundation system is not affected and will still be used. Part of the foundation system must remain in place. A report from a licensed structural engineer is required stating that the existing foundation is structurally sound and capable of supporting the proposed construction of the dwelling. It may be modified In addition to typical home rehabilitation projects, this program can be used to convert a one family dwelling to a two, three, or four family dwelling. An existing multi unit dwelling could be decreased to a one to four family unit 10

11 An existing house on another site can be moved onto the mortgaged property; however, release of loan proceeds for the existing structure on the nonmortgaged property is not allowed until the new foundation has been properly inspected and the dwelling has been properly placed and secured to the new foundation. HOW THE PROGRAM CAN BE USED. This program can be used to accomplish rehabilitation and/or improvement of an existing one to four unit dwelling in one of three ways: A. To purchase a dwelling and the land on which the dwelling is located and rehabilitate it. B. To purchase a dwelling on another site, move it onto a new foundation on the mortgaged property and rehabilitate it. C. To refinance existing indebtedness and rehabilitate such a dwelling. 11

12 The Full 203k is very similar to the 203k Streamline. There a The Full 203k is very similar to the 203k Streamline. There are only a couple key differences with this loan product. e on Any Structural Repairs. Something as big as jacking up your house to replace the sill plate falls under the Full 203k. Moving or altering a load bearing wall. So would knocking the house down to rebuild it, as long as you leave part of the existing foundation. y a ccost. The Streamline is $35,000 MAX (Line B14 on the Maximum Mortgage Worksheet). If your repairs and renovations go above $35,000 then you need to get into a Full 203k loan. HUDHUD Consultant. The Full 203k requires a HUD consultant on the loan. This person draws up the paperwork and works with you and your contractors to get a write-up before the appraisal Consultant. The Full 203k requires a HUD consultant on the loan. This person draws up the paperwork and works with you and your contractors to get a write up before the appraisal le key differences with this loan product. Structural Repairs. Something as big as jacking up your house to replace the sill plate falls under the Full 203k. So would knocking the house down to rebuild it, as long as you leave the foundation. HUD Consultant. The Full 203k requires a HUD consultant on the loan. This person draws up the paperwork and works with you and your contractors to get a write up before the appraisal. Cost. The Streamline is $35,000 MAX (Line B14 on the Maximum Mortgage Worksheet). If your repairs and renovations go above $35,000 then you need to get into a Full 203k loan. The Consultant s first task during the loan process is to perform an initial property inspection. If the homeowner is unfamiliar with repairs required by FHA guidelines, they should involve the Consultant as soon as possible (MPR items) If the borrower has a good grasp of what is needed, the Consultant can be brought in after the contractor has submitted bid(s). The Consultant s role is to review and verify the The Consultant s role is to review and verify the accuracy accuracy of of the the contractor s estimates estimates and and ensure ensure that that all all required repairs are completed. The The Consultant is is also responsible for for overseeing overseeing the draw process the draw process If the borrower is not happy with the quality of the work, the Consultant will request that the If the contractor borrower correct is not any happy issue prior with to the payment. quality of the work, the Consultant will request that the contractor correct any issue prior to payment. 12

13 Any changes to the original plans, cost overruns and use of the Contingency Reserve must be approved by the Consultant. Any changes to the original plans, cost overruns and use of the Contingency Reserve must be approved by the Consultant. REPAIR AMOUNT CONSULTANT FEE $0 - $7,500 $400 $7,501 - $15,000 $500 $15,001 - $30,000 $600 $30,001 - $50,000 $700 $50,001 - $75,000 $800 $75,001 - $100,000 $900 $100,000 and up $1,000 $25 added for each unit over the 1st ($75 max) $25 ELIGIBLE IMPROVEMENTS. (Full 203k) Mortgage proceeds must be used in part for rehabilitation and/or improvements to a property. There is a minimum $ requirement for the eligible improvements on the existing structure on the property. 13

14 The mortgage must include one or more of the items listed below, with a cumulative minimum of $5,000. A. Structural alterations and reconstruction (e.g., additions to the structure, finished attics, repair of termite damage and the treatment against termite infestation, etc.) B. Changes for improved functions and modernization (e.g., remodeled kitchens and bathrooms). C. Elimination of health and safety hazards (including the resolution of defective paint surfaces and/or leadbased paint problems on homes built prior to 1978). D. Changes for aesthetic appeal and elimination of obsolescence (e.g., new exterior siding). E. Reconditioning or replacement of plumbing (including connecting to public water and/or sewer system), heating, air conditioning and electrical systems. F. Roofing, gutters and downspouts. G. Flooring, tiling and carpeting. H. Energy conservation improvements (e.g., new double pane windows, insulation, solar domestic hot water systems, etc.). 14

15 J. Major landscape work and site improvement, patios and terraces that improve the value of the property equal to the dollar amount spent on the improvements or required to preserve the property from erosion. K. Improvements for accessibility to the Handicapped. When basic improvements are involved, the following costs can be included in addition to the minimum $5,000 requirement for the existing structure: Construction or rehabilitation of a detached garage or an attached unit(s) to the existing dwelling (if allowed by the local zoning ordinances). New cooking ranges, refrigerators and other appurtenances (Used appliances are not eligible). Interior or exterior painting. 15

16 Luxury items and improvements that do not become a permanent part of the real property are not eligible as a cost rehabilitation. The items listed below (not limited to this list) are not acceptable under the 203(k) program, including the repair of any of the following: Barbecue pits; bathhouses; dumbwaiters; exterior hot tubs, saunas, spas and whirlpool baths; outdoor fireplaces or hearths; photo murals; swimming pools; television antennas and satellite dishes; tennis courts; tree surgery. Additions or alterations to provide for commercial use are not eligible. A. Insurance of advances. This refers to insurance of the mortgage prior to the rehabilitation period. A mortgage that is a first lien on the property is eligible to be endorsed for insurance following mortgage loan closing, disbursement of the mortgage proceeds, and establishment of the Rehabilitation Escrow Account. 16

17 The mortgage amount may include funds for the purchase of the property or the refinance of existing indebtedness, the costs incidental to closing the transaction, and the completion of the proposed rehabilitation. The mortgage proceeds allocated for the rehabilitation will be escrowed at closing in a Rehabilitation Escrow Account. Rehabilitation Escrow Account. When the loan is closed and Insurance of Advances is used, the proceeds designated for the rehabilitation or improvement, including the contingency reserve, mortgage payment reserve and monies retained under the Escrow Commitment Procedure, are to be placed in an interest bearing escrow account insured by the Federal Deposit Insurance Corporation (FDIC) The lender (or its agent) will release escrowed funds upon completion of the proposed rehabilitation in accordance with the Work Write up/estimate and the Draw Request. Release of funds for completed work typically will not occur until one day following loan closing. 17

18 Streamline 203k allows up to 50% upfront release of funds prior to work being started. A final Inspection and title update will commence when all work is completed, followed by the release of the remaining repair balance. Full Full 203ks require that funds only be released for work that has been performed and inspected. No upfront monies are released. There is a maximum of 5 draws/inspections per project. The final release of the escrowed rehabilitation funds is to take place only after the local jurisdiction has provided its final acceptance of the work and the HUD or the Direct Endorsement (DE) Underwriter has reviewed the final Compliance Inspection Report and the Draw Request form. At this time the CO is delivered to the Lender if applicable. 18

19 The Final Release Notice can be issued, authorizing the final payment, which may include the interest earned on the escrow account and the total of all holdbacks. This Notice also directs the prepayment of the mortgage by the amount remaining in the contingency reserve and any unused inspection fees or mortgage payments, when applicable. All inspections are performed by HUDapproved fee Inspector/HUD Consultant or Appraiser assigned by the Lender. The inspector is to use the architectural exhibits in order to make a determination of compliance or non compliance. The HUD accepted Plan Reviewer (if used) can be allowed to do the fee inspections on the property, because he/she is already familiar with the proposed improvements and can inspect the rehabilitation knowing what was accepted in the work write up. 19

20 When the inspection is scheduled due to a request for payment, the inspector is to indicate on the Compliance Inspection Report whether or not the work has been completed. Also, the inspector must use the Draw Request form. The first draw must not be scheduled until the lender has determined that the applicable building permits have been issued. The inspection fees are paid by the mortgagor, but, the lender is responsible to ensure that payment is made to the inspector. If the inspection fee is part of the escrow, then it can be released along with the release of the escrow funds as a result of an acceptable Draw Request. 20

21 A ten (10) percent holdback is required on each release from the Rehabilitation Escrow Account. The total of all holdbacks may be released only after a final inspection of the rehabilitation and issuance of the Final Release Notice. At the discretion of the Lender, the cost estimate may include a contingency reserve if the existing construction is less than 30 years old or the nature of the work is complex or extensive. A contingency reserve is required when there is evidence of termite damage or previous termite infestation. For properties older than 30 years the cost estimate must include a contingency reserve of a minimum of ten (10) percent of the cost of rehabilitation; however, the contingency reserve may not exceed twenty (20) percent where major remodeling is contemplated. If the utilities were not turned on for inspection, a minimum fifteen (15) percent is required. 21

22 The reserve cannot be used to make additional improvements to the dwelling that are considered luxury items; however, it may be used to pay for added construction costs caused by deficiencies (health, safety and necessity) discovered during rehabilitation. Any unused portion of the Contingency Reserve Fund remaining at the time of issuance of the Final Release Notice must be applied to reduce the mortgage balance. Work items cannot be deleted from the rehabilitation if it will decrease the value of the home, since the loan has already closed. If the Borrower feels that the contingency reserve will not be used and they wish to avoid having the reserve applied to reduce the mortgage balance after issuance of the Final Release Notice, the borrower (or any other person, organization or agency on the borrower's behalf) may place their own funds into the contingency reserve account. 22

23 In this case, if monies are remaining in the account after the Final Release Notice is issued, the monies may be released back to the borrower (or other person, organization or agency who placed the money in the contingency reserve). If the mortgage is at the maximum mortgage limit for the area or for the particular type of transaction, but a contingency reserve is required, the contingency reserve must be placed into an escrow account from other funds of the borrower at closing. Under these circumstances, if the contingency reserve is not used, the remaining funds in the escrow account will be released to the borrower after the Final Release Notice has been issued. 23

24 Funds not to exceed the amount of six (6) mortgage payments (including PITI and the mortgage insurance premium) can be included in the cost of rehabilitation and deposited in the rehabilitation escrow account to assist a mortgagor when the property is not occupied during rehabilitation. The number of mortgage payments cannot exceed the completion time frame required in the Rehabilitation Loan Agreement. The lender must make the monthly mortgage payments directly from the interest bearing reserve account. Monies remaining in the reserve account after the Final Release Notice is issued, or occupancy of the property, must be used to reduce the mortgage principal. 24

25 Based on the lesser of: 1 The estimate of As is value or the purchase price of the property before rehabilitation, whichever is less, plus the estimated cost of rehabilitation and allowable closing costs; or 110 percent of the expected market value of the property upon completion of the work plus allowable closing costs. The maximum mortgage amount is based on 96.5/97.75 percent of the lessor of the above. 25

26 Expenses eligible to be included in the cost of rehabilitation are materials, labor, contingency reserve, overhead and construction profit (put in each work item), up to six (6) months of mortgage payments, plus expenses related to the rehabilitation such as permits, fees, inspection fees by a qualified home inspector (i.e., a member of the American Society of Home Inspectors), licenses, inspection fees during construction by a HUD accepted Consultant/Inspector, lien protection fees for title updates and architectural/ engineering fees. The cost of rehabilitation may also include the Supplemental Origination Fee which the mortgagor is permitted to pay when the mortgage involves insurance of advances, and the discounts which the mortgagor will pay on that portion of the mortgage proceeds allocated to the rehabilitation. A mortgage is eligible for an increase of up to 20 percent in the maximum insurable mortgage amount, if such an increase is necessary for the installation of solar energy equipment. The solar energy system's contribution to value will be limited by its replacement cost or by its effect on the value of the dwelling. 26

27 Overview Overview Style Renovation mortgage enables a borrower to obtain The a HomeStyle purchase transaction Renovation mortgage enables a borrower to obtain a purchase mortgage or a limited cash out refinance mortgage transaction mortgage or a limited cashout receive refinance funds mortgage to cover the and costs receive of funds and repairs, to cover remodeling, the costs renovations, of repairs, remodeling, or energy improvements renovations, to or the energy property. improvements The mortgage to may be delivered the property to Fannie Mae prior to completion of the renovation, subject to limited recourse as described below. There are no required improvements or restrictions on the types of repairs allowed or a minimum dollar amount for the repairs, however, must be permanently affixed to the real property and add value to the property. Renovation-related costs that may be considered as part of the total renovation costs include: property inspection fees; costs and fees for the title update; architectural and engineering fees; independent consultant fees; costs for required permits; and other documented charges, such as fees for energy reports, appraisals, review of renovation plans, and fees charged for processing renovation draws. 27

28 The security property for a HomeStyle Renovation Mortgage must be: a one- to four-unit principal residence a one-unit second home, or a one-unit investment property. Max Loan To Value (LTV) Purchase 95% Owner Occ. (SFR only) Purchase 85% Owner Occ. (2 units) Purchase 75% Owner Occ. (3-4 units) Purchase 90% Second Home (SFR only) Purchase 80% Investor (SFR only) Purchase 90% Second Home (SFR only) Purchase 80% Investor (SFR only) 28

29 A HomeStyle Renovation Mortgage may be either a fixed-rate mortgage or an ARM loan. The original principal amount of the mortgage may not exceed Fannie Mae s maximum allowable mortgage amount for a conventional first mortgage. Fannie Mae provides HomeStyle Renovation Maximum Mortgage Worksheet, to assist lenders in calculating the maximum loan amount. The cost of renovations is limited to 50% of the as completed appraised value of the property. The loan amount is based on LTV derived from lesser of: TOTAL acquisition cost including all construction related expense Or from the as completed value of the home Fannie Mae limits the number of residential properties the borrower may currently be financing to four properties, including his or her principal residence. This limitation is based on the total number of properties financed, not just the number of mortgages sold to Fannie Mae or the number of HomeStyle mortgages sold. 29

30 Joint ownership in residential real estate is considered the same as total ownership of an individual property. The fourproperty limit applies to any combination of ownership in one- to four-unit properties, whether or not the financing involves a HomeStyle product. For example, a borrower may own four single-family properties; two two-family properties and two single-family properties; one co-borrower may own one single-family property and the other co-borrower may own three two-family properties; a borrower may own four four-family properties; etc. The appraisal report for a HomeStyle Renovation Mortgage must provide an as completed appraised value that estimates the value of the property after completion of the renovation work. 30

31 All renovation work must be performed by a licensed contractor. A borrower must choose his/her own Contractor to perform the needed Renovations, subject to the lender s determination that the contractor is qualified and experience. The contractor must have all appropriate Licenses and Insurance as required by the State and or municipality they are in. The 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 and provide an indication of when various jobs or stages of completion will be scheduled (including both the start and completion dates). The lender must use the plans and specifications to document and evaluate the quantity, quality, and cost of the renovation work that is to be done and to determine the amount of financing that will be available. These plans and specifications also must be used by the appraiser in the development of his or her opinion of the as completed value of the property. 31

32 The costs of the renovations will be based on the plans and specifications for the work and on the contractor s bids for all of the work requested by the borrower. The renovation costs may include a contingency reserve, renovation-related costs, and an escrow for mortgage payments that come due during the renovation period, if the borrower is unable to occupy the property during the renovation. The construction contract must: itemize the specific work that the contractor agrees to perform for the borrower, state the agreed-upon cost of the renovation, identify all subcontractors and suppliers, include an itemized description that establishes the schedule for completing each stage of the work and the corresponding payments to be made to the contractor. This contract, which must be executed by both the contractor and the borrower, should also require the contractor to: be duly licensed (if required by applicable law); obtain all required insurance coverages (such as all-risk, public liability, workmen s compensation, and automobile liability); complete the work in compliance with the contract and all applicable government regulations (such as building codes and zoning restrictions); 32

33 obtain the necessary building permits (including a certificate of occupancy, if required); provide for appropriate remedies for resolving disputes (including an agreement to indemnify the borrower for all property losses or damages caused by the contractor s employees or subcontractors). Borrower contacts a Renovation specialist: loan options are discussed and preapproval decision is made. FNMA /Conventional vs. FHA/Government. (Possibly adding the words 203k or Homestyle) Contract of Sale is written (Purchase)/using actual sales price, type of financing and down payment % off of the Sales price, loan amount is Sales price minus down payment They same way you normally write it up.. No Sweat! Work write up/estimate Contractor or HUD Consultant submits to the Lender. ( 1 2 weeks from Contact acceptance) Appraisal is ordered with the Estimate to Maximize value (After Improved Value) Finalize commitment and clear conditions if any. 33

34 Loan closes/funds prior to any work beginning. Repairs funds are held in an escrow account and disbursed base on specific loan guidelines (usually after an inspection/up to 5 draws). Be sure your borrower deals with a Lender who administers the draws directly to avoid payment delays. rbbuyers expect much more today, yet most agents haven t re-tooled or systematized their buyer processes to deliver that "value-added" service that buyer s demand Discussing Renovation programs is an added Value service. Using a Renovation Loan actually adds value ($$$$) s r that "value added" service that buy Attract more potential buyers, those looking for fixer uppers Owner Occupants and First time Investors are out there, use these products to increase your Sales/Listings. Overcome buyers cosmetic objections (Vision) How many hours have you spent driving homebuyer from listing to listing? 34

35 The perfect Loan Product for properties being sold AS IS REO and short sales. Realtors are paid when the loan closes, not after repaired Increases your referral base utilizing niche products (Buyers selling you by word of mouth about immediate equity (at times) and the newer beautiful home) When its time to re list, the property is already updated Wouldn t be nice to re List the home in 2020 already updated instead of you having to List a REALLY outdated listing (Its your headache now) Remodeling market totaled nearly $298 Billion in 2013 Estimated to grow at an annual rate of 3.5% from 2013 to 2015 Median age of housing stock is currently 37 years +account Homes account for over 22 percent of national energy usage, and about half of the national housing stock was build before Median square footage of new homes today is 2,280, compared to 1,595 for homes built in the 1980s Median square footage of new homes today is 2,267, compared to 1,595 for homes built in the 1980s Remodeling market totaled nearly $286 Billion in 2009 Estimated to grow at an annual rate of 3.5% from 2011 to 2015 Median age of housing stock is currently 35 years + 35

36 Trade-up buyers spend 22% more on home improvements than first time homebuyers Income bracket: 80K to 120K Expenditures by category: Kitchens - $16 Baths - $11 Additions/alterations - $28 Systems - $23 Replacements - $44 (2013 in Billions) Homes account for over 20 percent of national energy usage, and about half of the national housing stock was build before Median square footage of new homes today is 2,267, compared to 1,595 for homes built in the 1980s Return based on type of improvement: Bath 64% Kitchen 69% Master Bedroom 63% Basement 70% Deck 73% (National Average) Return based on type of improvement: Bath 64% Kitchen 69% Master Bedroom 63% Basement 70% Deck 73% Renovation mortgage Loans program are hard takes to do too and long to close! complicated mortgage program takes too long to close! Not True: It all comes down to the people that are involved in the process 36

37 This type of loan takes too long to close A Renovation loan does have a few more steps but should take no longer than 30 days to close CLQB9vBC8rwzisYJPHGDncqggiWCLn9ryH5CMnfvO Y7 Instructor will ask several oral questions to the attendees So to ascertain a basic understanding of the Renovation Loans covered Guidelines and Benefits to them and their buyers by a show of hands. 37

38 This educational presentation was presented by: May Renovation be your Inspiration Movement Mortgage Movement Mortgage, LLC is an Equal Housing Lender. NMLS ID# ( Movement Mortgage, LLC is licensed by AK # AK39179, AL # 21022, AR # , AZ # , CA Department of Business Oversight under the California Residential Mortgage Lending Act # , "CO Regulated by Division of Real Estate", CT # ML 39179, DE # , DC # MLB39179, FL # MLD200, GA # 23002, ID # MBL 8027, "Illinois Residential Mortgage Licensee" # MB , IN # 18121, IA # , Kansas Licensed Mortgage Company # SL , KY # MC85066, LA, MD # 19094, MA Banker & Lender # MC39179, MI # FL , MN # MN MO 39179, Mississippi Dept of Banking and Consumer Finance" # 39179, MO # , NV # 3402/3401, NJ Department of Banking and Insurance", NC # L , ND # MB102519, OK # ML002646, OR # ML 5081, PA # 34374, SC # MLS 39179, SD # ML.05007, TN # , TX, VA # MC 5112, WA # CL 39179, WV # MB 32019/ML 32020, and WI # Interest rates and products are subject to change without notice and may or may not be available at the time of loan commitment or lock in. Borrowers must qualify at closing for all benefits. Movement Mortgage is a registered trademark of the Movement Mortgage, LLC, a Delaware limited liability company. 841 Seahawk Cir,Virginia Beach, VA