On Behalf of HUD & FHA Welcome to our session on the FHA 203(h) Home Mortgage Insurance for Disaster Victims Program

1. On Behalf of HUD & FHAWelcome to our session on theFHA 203(h) Home Mortgage Insurance for Disaster Victims Program

2. Housekeeping Phone lines ~ Q&A ~ Polling Activities • Phone lines – muted • Questions – chat panel • Interactivity – voting tools and polling questions 2

3. Your Instructor Judy Nash-Ellis 3

4. FHA Subject Matter Expert Welcome to our guest, Lisa Ellis, Credit Policy Specialist from FHA, Office of Single Family Program Development - who will be responding to participant questions and offering additional guidance during today’s webinar 4

5. FHA 203(h) Home Mortgage Insurance for Disaster Victims Program

6. Polling Questions How long have you been in the mortgage industry? How long have you been working with FHA mortgage loans? 6

7. Course Objectives Source: HUD Handbooks 4155.1 and 4155.2 7 • Outline 203(h) basic program purpose • Identify eligible participants and customers • Know and identify specific program requirement

8. Course Overview 8 • Section 203(h) program description • How the program can be used • Eligibility requirements • Maximum insurable mortgage • Mortgage term • Mortgage insurance premiums (MIP) • Minimum borrower cash investment, closing costs and prepaid expenses • Refinancing policy • Basic underwriting criteria

9. Polling Question Are you currently doing 203(h) loans? 9

10. Section 203(h) Program Description • 203(b) – Centerpiece of HUD’s Single Family Mortgage Insurance Programs • 203(h) – Falls under above Program. The big difference is the cash investment. 203(h) allows for 100% financing 10 Source: http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/ins/sfh203b

11. What is a 203(h)? Source: http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/ins/203h-dft 11

12. 203(h) Program Basics 12 • 203(h) works in conjunction with 203(b) • President – federally declared disaster • Displaced Owner or Displaced Renter • Rebuild at same site (not rehabilitation) • Purchase another home • New residence property requirements • Note: Advantage of the 203(h) program is 100% Financing

13. 203(h) Program – More Details 13 • Original home must have been located in an area that been designated by the President as a federally declared disaster • Home must have been destroyed or damaged to such an extent that reconstruction or replacement is necessary • Home rebuilt on the existing property or a new home residence in another area

14. How Do You Know If A Home Is Located In A Disaster Area? 14 Source: http://www.fema.gov/disasters • Disaster Declarations • By State • By Year • Disaster Declaration Process • Disaster Aid Programs • Disaster Declarations • Main Content Total number of declared disasters: by State and by Year

15. Polling Question Can you rehabilitate a home with a 203(h) loan? 15

16. Answer 16 No, you cannot use the 203(h) program to rehabilitate a home.

17. What Questions Do You Have? 17

18. Eligibility Requirements 18

19. 203(h) Eligibility Requirements 19 • Borrower: • Can be owner or renter: • Documentation includes valid driver’s license, voter registration card, or utility bills • Must have been permanent resident of destroyed or damaged residence in the Presidentially-declared major disaster area: • Damage documentation includes insurance report, inspection report, conclusive photographs • Must apply for 203(h) within one year of the Major Disaster Declaration

20. 203(h) Properties Eligible to be Purchased with the 203(h) Mortgage Insurance 20 • One-unit homes • Units in an approved condominium project • Property must meet HUD’s Minimum Property Standards and Minimum Property Requirements • Note: Two-, three-, and four-unit properties maynot be purchased under this program

21. 203(h) Underwriting Basics 21 • Maximum insurable mortgage • Mortgage term • Mortgage Insurance Premium (MIP) • Minimum borrower cash investment • Closing costs and prepaid expenses • Refinancing with rehabilitation • Underwriting criteria

22. Maximum Insurable MortgageMortgage TermsMortgage Insurance Premiums (MIP) 22

23. Maximum Insurable Mortgage, Mortgage Terms, and Mortgage Insurance Premiums (MIP) 23 • Maximum Insurable Mortgage – subject to statutory loans limits

24. Minimum Borrower Cash Investment, Closing Costs and Prepaid Expenses 24

25. Minimum Borrower Cash Investment, Closing Costs, Prepaid Expenses 25 • Down payment (minimum borrower cash investment); closing costs and prepaid expenses: • No down payment required • Closing costs and prepaid expenses (paid by the borrower in cash or Lender premium pricing) • Note: Seller could contribute to closing costs and prepaid expenses (limited to 6% of sales price)

26. Refinancing Policy 26

27. Refinancing Policy 27 • Refinancing using 203(k) Rehabilitation Program under 203(h) Disaster Circumstances – Damaged Residences: • - Exempt from one year requirement • - Eligible for 203(k) regardless of age • - 100% financing is NOT available

28. 203(h) Underwriting Specifics 28 • Lenders should be flexible and accommodating • Gaps in employment, documentation for employment, available funds, and qualifying ratios • HUD’s Credit Alert Verification Reporting System (CAIVRS) – recent derogatory credit, bankruptcy, foreclosure, deed-in-lieu, and delinquent federal obligations

29. 203(h) More Underwriting Specifics 29 Source: HUD Handbook 4155.1 6.A.6.j • Credit • CAIVRS • Income • Qualifying Ratios • Assets • Liabilities

30. Polling Question Can you finance closing costs with a 203(h) loan? 30

31. Answer 31 No, you cannot finance closing costs with a 203(h) loan.

32. What Questions Do You Have? 32

33. Let’s Review • 203(h) defined • Purpose for 203(h) • Eligibility requirements 203(h) • Maximum insurable mortgage, mortgage term, and MIP • Minimum borrower cash investment, closing costs and prepaid expenses • Refinancing policy • (203K) • Underwriting basics 33

34. Session Summary 34 • As we conclude today’s session, you should now be able to: • Outline 203(h) basic program purpose • Identify eligible participants and customers • Know and identify specific program requirements

35. Reminders: • Course Evaluation • Recorded version of webinar will be available on the HUD website • Webinar FAQs will be available on HUD website • FHA Knowledge Database: • http://portal.hud.gov/hudportal/HUD?src=/FHAFAQ • CALLFHA (800) CALLFHA – (800) 225-5342 or email us at answers@hud.gov. Next Steps & Resources 35

36. We look forward to your participation in other training events. Thanks for attending this course! • Overview of HUD/FHA Programs • FHA 203(k) Rehabilitation Mortgage Insurance Program • FHA Energy Efficient Mortgage (EEM) • FHA Home Equity Conversion Mortgage (HECM) • How to Manually Underwrite an FHA Mortgage • Credit Underwriting - Borrower Analysis • Credit Underwriting - Loan Calculations • Fundamentals of DE Credit Review & TOTAL Scorecard • DE Lender & DE Underwriter Roles & Responsibilities • FHA Condominium Approval Process • Fundamentals of Insurance Endorsement • FHA Appraisal Requirements - Property Types • How to Review an FHA Appraisal 36

37. FHA 203(h) Home Mortgage Insurance for Disaster Victims Program Thank you!