Fannie Mae Home Path Renovation Loans

HomePath® Financing
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time and without notice. This is not an offer to enter into a rate lock agreement under MN law‭ ‭ r any other applicable law‭ – 0509-63‭
0 HomePath® Financing Overview
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Copyright © 2011 Prospect Mortgage, LLC – Primary Series

Overview: HomePath®…What’s In It for Me?

 Fannie Mae HomePath® loans provide you with
a broader pool of potential buyers
− Fannie Mae HomePath® guidelines allow for easier
underwriting and a faster closing
− Properties require no Appraisal or Mortgage Insurance
− Selling Agents can have more successful closed sales
− Listing Agents have greater success in closing a property with
a HomePath® Mortgage versus other financing options

 More closed sales = More Commissions
($$$ in your pocket)
Prospect Mortgage is the largest Retail Lender of HomePath® Financing in the Nation

1 HomePath® Financing Overview Copyright © 2011 Prospect Mortgage, LLC – Primary Series

Overview: Prospect Mortgage

 Prospect Mortgage is the Nation’s Largest Independent
Residential Retail Lender
− 9th largest Lender in the nation
− 2nd largest 203K Lender in the nation
− 7th largest in FHA loan origination nationwide, according to Mortgage
Data Web.
− 12th largest in total purchase loan origination nationwide, according to
Mortgage Data Web
• Purchase volume accounts for 62.7% of our total applications, reflecting our
deep legacy and strong relationship with real estate agents.
 Largest Retail Lender of Fannie Mae HomePath® Financing in
the Nation
− There are two types of HomePath® Loans:
1. Normal Fannie Mae HomePath® Loan
2. Fannie Mae HomePath® Renovation Loan
- Prospect Mortgage does not provide financing for the HomePath®
Renovation Loan at this time


Overview: Fannie Mae HomePath®

 Fannie Mae has over 100,000 real estate owned (REO)
properties currently on their books
 There is a need to find buyers for these properties and
lenders to provide financing to assist in stimulating
the economy
 Fannie Mae owned properties eligible for the Fannie
Mae HomePath® Mortgage offer affordable housing
opportunities with up to 97% financing
 Only 10% down on 1 unit investment properties
Note: Fannie Mae identifies properties eligible for the HomePath® financing on the HomePath® web
site. Prospect Mortgage is only offering the HomePath® Mortgage program – not the HomePath®
Renovation Mortgage


Overview: Indentifying HomePath® Properties

 Eligible HomePath® Mortgage Financing

This identifies that the HomePath Property is eligible for either a
HomePath Mortgage OR a HomePath Renovation Mortgage

 HomePath® Renovation Mortgage Financing

This identifies that the HomePath Property is eligible for a
HomePath Renovation Mortgage ONLY!

(Not offered by Prospect Mortgage at this time)


Overview: HomePath® Financing Special Offers
 HomePath® Buyer Incentive
– Fannie Mae is currently offering buyers up to 3.5% in closing cost
assistance through June 30, 2011
– The HomePath property buyer must meet the following qualifications to
be eligible:
 Buyers and/or Selling Agents (the agent representing the buyer) must request
the incentive upon submission of initial offer in order to be eligible
 The initial offer must be submitted on or after April 11, 2011 and close by
June 30, 2011. If an initial offer was made prior to the effective date, the offer
is not eligible for the incentive
 The sale must close on or before June 30, 2011. No exceptions will be
made to this deadline
 Only buyers purchasing a HomePath property as their primary residence may
receive up to 3.5% in closing cost assistance. Second homes and
investment properties are excluded from the incentive
 Buyer must sign the Owner Occupant Certification Rider to the Real Estate
Purchase Addendum
 If a buyer's total closing costs are under 3.5%, the difference will not be
available as a credit to the buyer


Overview: HomePath® Financing Special Offers (continued)
 HomePath® Selling Agent Incentive
– Fannie Mae Offering Selling Agent Bonus through June 30, 2011:
 Selling Agents, representing clients who affirm they will become owner
occupants of a primary residence purchasing a HomePath property, may
receive a bonus of $500 in Arizona and Texas OR $1,000 in California and
Washington
– Selling Agent bonus must be requested in the initial offer in order to be
eligible
– No bonus will be given for second homes or investment properties.
– No bonus will be given on any property not located in AZ, TX, CA, or WA.
 Retail and public entities are eligible for the incentive; however pool and
auction sales are not eligible.
 The incentive may not be available for a property where Fannie Mae acquired
the property in connection with financing under a reverse mortgage. Ask the
listing agent for details
 Fannie Mae reserves the right to remove any property from promotion or end
the promotion at any time. Any dispute over the payment of the incentive shall
be resolved by Fannie Mae in its sole discretion.

Note: Fannie Mae can give no assurance on the time required to close, but initial
Offers submitted after May 15, 2011 are particularly questionable for closing by the
incentive deadline of June 30, 2011.


Overview: Fannie Mae HomePath® Update

 For HomePath® Mortgages only:
− Even though an appraisal is not obtained by the lender for
HomePath® Mortgages, a market-rent schedule from an
appraiser is acceptable for determining rent for qualifying
purposes in accordance with standard policy

 For both the HomePath® Mortgage and HomePath®
Renovation Mortgage, we will:
− Waive the investor property loan-level price adjustments for
investor purchase transactions that have both an LTV ratio of
70 percent or lower and a credit score of 740 or higher

Enhancements are effective for loans delivered on or after February 1, 2011.


Overview: Fannie Mae HomePath® Update (continued)

 HomePath® Financing Changes Impact Desktop Underwriter®
(DU®). We will no longer label high-LTV or high-CLTV ratio
transactions as "Flexible Mortgages." DU will be updated to
remove all references to Flexible Mortgages and will permit the
following transactions up to a 97 percent LTV/CLTV/HCLTV ratio
under standard eligibility:
− One-unit – Fully amortizing fixed-rate and all standard ARM products
− Principal residence – Transactions with non-occupant borrowers as parties
− Purchase

 The following transactions will be excluded from the standard 97
percent LTV/CLTV/HCLTV ratio eligibility:
− High-balance mortgage loans – Interest-only loans
− HomeStyle® Renovation mortgages – Manufactured homes
− Loan purpose of construction – Co-op properties

Enhancements are effective for loans delivered on or after February 1, 2011.


Overview: HomePath® Program Highlights
 The Fannie Mae HomePath® Mortgage features:
− Up to 97% financing for owner occupied properties
− Up to 90% financing for investment properties
− Purchase transactions only
− No MI required – pricing‭adjustments‭in‭lieu‭of‭MI‭will‭apply‭to‭LTV’s‭greater‭
than 80%
− No appraisal is required – we will use sale price as the appraisal value
− Prospect Mortgage cannot order, see or receive an appraisal. Borrowers will be
required to sign an appraisal disclosure form at application
− Fixed Rates, ARM options are available (I/O not available)
− Allows for a Loan score of 660 with 80% LTV or greater. For loans with less
than 80% LTV, follow standard guidelines.
− High Balance transactions are allowed. Check with your Loan Officer about the
specifics of this program.
− The more restrictive policy applies when combining Fannie Mae HomePath®
with other programs.
− Non-traditional credit is not allowed

Overview: HomePath® Program Benefits (continued)

 Program can be used for Owner occupied, Second Home and
Investment properties
− Down payment (at least 3%) can be funded by borrowers own savings; a
gift; a grant; or a loan from a nonprofit organization, state or local
government, or employer. DAPs (Down Payment Assistance Programs)
and subordinate financing are not allowed as a source of down payment for
LTV’s‭over‭95%‭at‭this‭time.
− A‭5%‭minimum‭borrower‭down‭payment‭is‭required‭for‭LTV’s‭from‭80.01‭to‭
95%.
− There are No appraisal fees. Collection of itemized Credit Report Fees
only, has been approved


Overview: HomePath® Program Benefits (continued)

 First Look™ for Fannie Mae Homes
− Fannie Mae's First Look period contributes to neighborhood stabilization by encouraging home
ownership. During this period, owner occupants, public entities, and their partners can submit offers
and purchase properties without competition from investor offers. This gives Buyers buying their
home‭as‭a‭“primary‭residence”‭a‭“first‭look”‭at‭Fannie‭Mae‭homes.

− The First Look period is typically the first 15 days a property is listed on HomePath.com. Properties
within‭the‭First‭Look‭period‭now‭include‭a‭“countdown‭clock”‭on‭the‭property‭details‭page,‭which‭
displays the number of days remaining for owner occupants and public entities to submit offers.

− If the property remains available for sale after the expiration of the First Look period, investor offers
may be submitted and will be considered along with all other offers.

 Sample of a Listing
Showing


Fannie Mae HomePath®: Eligible Products

 The following Conventional Conforming products are
eligible for this program:
− 30 year fixed
− 15 year fixed
− LIBOR 5/1 ARM


Fannie Mae HomePath®: Pricing Adjustments

 The following pricing adjustments apply to all lenders and are
mandated by Fannie Mae for the Fannie Mae HomePath®
Mortgage:
− Loan‭level‭price‭adjustments‭in‭lieu‭of‭MI‭for‭LTV’s‭>‭than‭80%
− Loan‭level‭price‭adjustments‭specific‭to‭LTV’s‭>‭95%
− Loan level price adjustments for Investment properties
− Other standard conforming adjustments apply in addition to the above
except‭for‭investment‭which‭are‭in‭“replacement”‭of‭our‭standard‭investment‭
property adjusters
− HomePath® Mortgage pricing adjustments will be listed at the bottom of the
HomePath® Rate Sheet.

Note: Especially‭for‭high‭LTV’s‭/‭higher‭risk‭transactions‭– with pricing adjustments in lieu of MI – the overall pricing
under this program may not be favorable and could cause a transaction to be high cost as well. As always, compare
the HomePath® Mortgage to other options (FHA, VA, standard conforming) in order to assist the customer in
determining the best option for them. If at all possible do a Fannie Mae HomePath Mortgage.


Fannie Mae HomePath®: Additional Program Information
 Appraisals or property inspections are NOT to be ordered or reviewed by
the Lender
− Borrowers should not be discouraged from obtaining an appraisal or a property
inspection for their own benefit but it is for their information, only
− The Borrower or lender cannot use the appraisal they paid for on their own if they end
up switching to a non- HomePath® loan

 If the loan does NOT qualify for the Fannie Mae HomePath® Mortgage, the
loan may qualify under other program parameters
− Appraisal impacts must be communicated to the customer. i.e., fees, issues getting
water turned on etc. when this occurs. The appraisal fee disclosure must comply with
RESPA guidelines

 Fannie Mae as a seller may require copy of the credit report or
prequalification / preapproval letter
− The borrower is responsible to obtain and provide if required by Fannie Mae
We cannot provide a copy of the credit report to the borrower

 Fannie Mae will pay up to 6% in seller concessions on owner occupied
HomePath Properties
– Asking for closing costs in the initial offer is recommended
– All that can happen is that they are accepted, reduced or not accepted


Fannie Mae HomePath®: Versus Alternative Financing
HomePath® Financing – Alternative Financing –
Getting Buyers into Homes! Creating Issues Where the Loan Will Not Close!
 Key benefits of a HomePath® Loan:  Detriments Using Alternative Financing:
- Only 3% down required on a primary residence - Greater down payment required with seller
property and up to 6% in seller concessions concessions based on loan program
on owner occupied properties guidelines
- Mortgage terms based on loan program and
- Flexible mortgage terms (Fixed-rate, ARM or
availability
Interest-Only)
- Credit eligibility based on loan program
- Buyers qualify with less than perfect credit
- Down payment (min. 3%) can be funded by
- Down payment sources are based on loan
your own savings; a gift, grant or loan from a
program and underwriting guidelines
nonprofit organization, state or local
government or employer
- No mortgage insurance required** - Mortgage insurance required
- No property appraisal required - Appraisal required
- Only 10% down on 1 unit investment - Greater than 20% down on 1 unit investment
properties properties
- Allows investors to finance up to 10 properties
- Limit on the amount of properties that can be
- Investors with more than 10 properties will now
financed
be considered on a “case by case basis”


Fannie Mae HomePath®: Versus Alternative Financing

Key benefits of a HomePath® Loan: Detriments Using Alternative Financing:
 Minimal Condominium requirements  Condominium requirements
- HOA Certification required – subject to Owner
- HOA Certification not required
Occupancy ratios, delinquent dues ratios and
FNMA project standards
- $1 million Liability Insurance coverage
- Insurance to meet program guidelines
required
- HO6 coverage (20% of purchase price) –
- Master Policy/Binder must state verbiage, - CC&R’s, Bylaws and Articles of Incorporation
"Walls‐In" or HO6 coverage will be required requirements

- Master Policy Hazard Coverage to include
100% replacement cost
- Fidelity Bond – 21 units or more - Fidelity Bond requirements
- Flood insurance (if in a flood zone)

- HomePath listing or REO ID required

- Subject to FNMA guidelines, pending
litigation, commercial space requirements &
- Full review is not required
HOA Budgeted Reserve Requirement


Fannie Mae HomePath®: Automatic Notifications

 Sign up for the “Automatic Notifications” on the HomePath website for the
zip codes in your geographic market at http://www.homepath.com
− It will get provide you with new listings and price reductions the moment they are activated
− Very useful information to connect with Fannie Mae HomePath Listing Agents.


Fannie Mae HomePath®: Marketing Materials

Here are instructions for Listing Agents on how to get information from Storefront.
Loan Officers should pass on this information in an effort to work more closely Realtors.


Fannie Mae HomePath®: Appendix

Appendix


Appendix: HomePath® Credit Policy Parameters

Credit Policy Parameters – HomePath®
Property Type LTV TLTV CLTV LTV TLTV CLTV
Primary Fully Amortizing Interest-Only
1 unit 97 97 97 80 95 95
2 unit 80 80 80 N/A N/A N/A
3 – 4 unit 75 75 75 N/A N/A N/A

Second Home 90 90 90 80 90 90

Investment Property

1 unit 90 90 90 N/A N/A N/A
2 unit 80 80 80 N/A N/A N/A
3 – 4 unit 75 75 75 N/A N/A N/A
Co-op and Manufactured Housing is NOT available


Appendix: HomePath® Property Types

Property Types
Property Type Primary Second/Vacation Investment
Single-family – detached or attached X X X
2 units X N/A X
3 units X N/A X
4 units X N/A X
Low-rise condo X X X
High-rise condo X X X
PUD X X X
Cooperatives (allowed in New York) N/A N/A N/A
Condotels N/A N/A N/A
Manufactured Housing N/A N/A N/A
Factory Built Housing (Modular) X X X


Appendix: Fannie Mae HomePath® Marketing Collateral

 HomePath® Marketing
- Provides HomePath® Flyers to
assist in your marketing efforts
- Increased Property exposure
- Increase loan closings with more
qualified HomePath® Buyers
- Sells faster because of greater
exposure
- Property can potentially sell at a
higher net price


Fannie Mae Home Path Renovation Loans

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