FHA Webinar Transcript - HUD Exchange...you can purchase these homes two ways. You can do them with...

Enterprise Community Partners Moderator: Kent Buhl 6/29/2010, 2pm EDT

FHA Mortgage Insurance Issues Webinar

Enterprise Community Partners Moderator: Kent Buhl

June 29, 2010 2pm EDT

[WEBINAR 06-29-10]05:04:45 KENT

…Discussions and we hope your questions will focus on issues surrounding the use of FHA insurance programs with NSP including acquisitions rehabilitation, and resale. So with us today are three folks from HUD and one from Enterprise. We have David Noguera, uh, Doug Lynott and Lisa Ellis with HUD and Richard Pine from Enterprise Community Partners and, uh, welcome to each of you.

[WEBINAR 06-29-10]05:05:25 MALE Thank you.

[WEBINAR 06-29-10]05:05:28 KENT And, uh, Richard is going to be the one who guides us through the, uh, initial presentation. He'll be pausing it a time or two to, uh, ask questions along the way and the largest chunk of time for questions will be at the end. So, uh, take it away Richard.

[WEBINAR 06-29-10]05:05:49 RICHARD Thank you, Ken. I was noticing that, Ken, we already have, uh, at least one question asked so we've got some participants that, uh, are eager to hear some information and, uh, I hope that going through this we'll be able to answer most everybody's questions and share some information. We're, we're very appreciative of, uh, the opportunity to work with HUD to share this information with you. And I know that we introduced our, our, uh, HUD people on the phone but I just want to go over that one more time quickly.

[WEBINAR 06-29-10]05:06:19 RICHARD (CONTINUED) We've got Doug Lynott on and Doug is with single family sales and disposition at HUD.

[WEBINAR 06-29-10]05:06:24 DOUG Uh, if I can interrupt real quick, single family asset management.

[WEBINAR 06-29-10]05:06:28 RICHARD Oh, single family asset management. Um, and we also have Lisa Ellis who's here to help answer our, our ever ready questions and two of the take questions and then we have David Noguera who's here, uh, to help answer NFC questions. So we have a, a really good HUD panel who should be able to help us, uh, answer the questions that you may have. So let's see if we can't move forward.

[WEBINAR 06-29-10]05:06:55 RICHARD (CONTINUED) Uh, the purpose of the presentation is really as Kent said, really to look at how we can use everyday insurance programs with NSP and, and how they work together. We really want this to be a discussion so as we go through there'll be times where we will pause and ask for questions and, uh, try to answer them. Uh, we want to make sure that we are moving along fast enough though so that we can finish the


presentation in the allotted time. So as Kent said, if you have questions raise your hand or type them in and we will talk periodically to answer them.

[WEBINAR 06-29-10]05:07:30 RICHARD (CONTINUED) When you're using FHA mortgage insurance programs, uh, they can be used in a number of ways when we work with NSP. You can use them for acquisitions, rehabilitation, and resale. And there's some really positive aspects to working with the FHA programs. Uh, we're going to try and hit on some of those, Uh, and how they may, uh, work with NSP. On the acquisitions side, a non-profit organization can use the FHA financing to purchase homes to use with NSP program.

[WEBINAR 06-29-10]05:08:01 RICHARD (CONTINUED) And by doing this, uh, they get some benefits from it which is, one, it reduces the, the required down payment and it also increases the leveraging that's available. And this, as you're going into the acquisition you can purchase these homes two ways. You can do them with regular FHA financing or you can use the 203K to purchase the home. And both of those have, uh, again, certain benefits. FHA has really pulled up in the market place recently.

[WEBINAR 06-29-10]05:08:34 RICHARD (CONTINUED) They have increased the number of products and loans that they're giving. Not the number of products but the number of loans that they're, they're giving and have put a lot of effort into, uh, working with the different programs, uh, through NSP. But if you're a non-profit organization, in order to use the FHA, uh, loan products to purchase the property you have to be pre-approved and these approvals come from HUD. Uh, you would work with your Denver hoc, excuse me, with your hoc offices.

[WEBINAR 06-29-10]05:09:07 RICHARD (CONTINUED) For us here in Dallas it's Denver and we're working with them all the time. Uh, and the information that you need to know to make the application to your local hoc is in mortgage letters, uh, 2000, uh, mortgage letter number 8 and then 2002, mortgage letter number one. In general, in order to participate as a non-profit organization, there's a number of things that HUD will, uh, ask you. And first, you have to be approved as a non-profit for two years.

[WEBINAR 06-29-10]05:09:42 RICHARD (CONTINUED) You have to meet some administrative capacity issues and financial capacity issues and experience issues and you have to show that you have a quality control plan in place, that you have adequate facilities and, uh, you have to design an affordable housing program. And we have worked with the, the hoc on a number of applications and it is relatively, um, uh, easy to go through the process. It's a lot of work but by the time you're done with the application and you've gone through what HUD has asked you for, you could feel pretty confident that you have a program that would be successful.

[WEBINAR 06-29-10]05:10:25 RICHARD (CONTINUED) And that's what HUD's looking for. It's making sure that as they work with the different non-profit organizations that they will be successful in implementing the programs that they're working on with HUD. On—so let's pause for a second. On the acquisition side, um, are there any specific questions about acquisition? Again, you can use, uh, HUD's products to do, uh, just direct acquisition of properties as a non-profit organization once you're approved by your hoc to do that.

[WEBINAR 06-29-10]05:10:57 RICHARD (CONTINUED) And then you can also, uh, use the 203 K program to acquire properties. But was there any specific questions on that?


[WEBINAR 06-29-10]05:11:50 KENT We do have some hands up and, uh--

[WEBINAR 06-29-10]05:11:09 RICHARD Okay.

[WEBINAR 06-29-10]05:11:50 KENT Let's see, but, uh, let me remind you again that we can only unmute you if you have a phone icon next to your name. So Maureen, I see your hand up but, uh, to get a phone icon next to your name you'd have to hang up and then click the info tab above the upper lefthand corner and be sure to use your attendee ID number when you call back in. Uh, let's see, uh, let me try Carol. Carol, are you there? Do you have a acquisition question?

[WEBINAR 06-29-10]05:11:47 CAROL I'm here but I don't have a question.

[WEBINAR 06-29-10]05:11:50 KENT Don't have a question. Okay, and, uh, uh, no, I think you can go on, Richard.

[WEBINAR 06-29-10]05:12:01 RICHARD Okay, so when you're using, um, the 203 K program with NSP, you can use it for either, uh, on the acquisition side of the resale side. Uh, and using the 203 K provides you funds for the acquisition of a property and also ec—um, escrow funds for the repairs. Uh, again, this is—this is a very helpful product in that in—rather than having to have a working capital line of credit for your repairs or some type of second, uh, financing in place that is all rolled into your 203 K loan.

[WEBINAR 06-29-10]05:12:43 RICHARD (CONTINUED) It can—makes it, uh, uh, it's a relatively simple product to use and our process is in place you go through. But again, it—it allows you to, uh, combine the two into the one loan that you're getting through FHA. On the resale side, uh, when you're buying and selling to your home buyer, right now FHA is one of the main products in the market place that, uh, lenders are using to work with low to mod income home buyers and first time home buyers.

[WEBINAR 06-29-10]05:13:15 RICHARD (CONTINUED) Uh, they have a lower down payment, uh, and when you're working with NSP, you're allowed to use, uh, the NSP funds to pay, uh, virtually all reasonable closing costs and, uh, you're also allowed to combine, uh, the HUD funds with other program subsidies and I know that there was a question, I believe Mark had a question on can we use NSP funds in conjunction with the FHA mortgages. And, uh, he—his question here is most of our borrowers will use FHA financing.

[WEBINAR 06-29-10]05:13:50 RICHARD (CONTINUED) We're being advised by FHA approved lenders that FHA will not accept any secondary financing even soft NSP2 second mortgage—mortgages meant to preserve affordability. Can you sug—suggest acceptable language? And with that, I might defer because that is a specific question. I might defer to either David or Lisa on that one.

[WEBINAR 06-29-10]05:14:15 LISA Alright, well, um, it's Lisa. Good afternoon everyone and, uh, thank you again for supporting, uh, all of our wonderful programs here at FHA. This is a very interesting question, um, I mean, in regards to having a second mortgage is to, of course, make sure that we do have acceptable language and that that second mortgage, um, does, uh, follow our guidance which is, of course, listed in the 4155.1.


[WEBINAR 06-29-10]05:14:45 LISA (CONTINUED) Um, in regards to a suggested acceptable language, again refer back to the 4155.1 handbook and the 4155.1 will go ahead and give you that guidance that is necessary. Uh, in regards to this question, again, for this call you do have my personal email address and I would love to be able to get some type of case number in which one of our home ownership centers have gone ahead and have said no in regards to a second mortgage, um, as well as possibly the alternate investor.

[WEBINAR 06-29-10]05:15:25 LISA (CONTINUED) It appears as though that is a question, is coming from where—where it possibly was submitted over to an investor and possibly the investors, they know that the second mortgage was not acceptable per FHA guidelines. So thank you very much.

[WEBINAR 06-29-10]05:15:42 RICHARD Thank you, Lisa. And, and let me ask.

[WEBINAR 06-29-10]05:15:44 LISA Uh huh.

[WEBINAR 06-29-10]05:15:45 RICHARD It's sort of a follow up. When we're talking about combining these, uh, FHA with other subsidy programs, is there a limit to the number of programs, uh, or funds that can be stacked behind a FHA loan?

[WEBINAR 06-29-10]05:15:58 LISA Absolutely not. Uh, you can have multiple liens against the property at which is, of course, is more than accessible but again we're looking to make sure that the language within the note is acceptable for, of course, per our guideline.

[WEBINAR 06-29-10]05:16:14 RICHARD Thank you, thank you.

[WEBINAR 06-29-10]05:16:16 LISA You're welcome. Thank you.

[WEBINAR 06-29-10]05:16:21 RICHARD So benefits to the homebuyer. One of the benefits is a lower down payment. And FHA requires a minimum of 3 ½ percent down. And we can use NSP funds to pay for up to half of the required down. Now that is a CDBG and a NSP limitation. But again, that's one of the benefits of working with FHA is that you can get to the point with NSP where you're really reducing the required out of—out of pocket funds with the homebuyer.

[WEBINAR 06-29-10]05:16:50 RICHARD (CONTINUED) Uh, the down payment assistance that, uh, that the homebuyer receives has to come from a government agency or public entity. And, and for purposes of what we're talking about for NSP, if you have a municipality that owns the property and is trying to fill that property that municipality cannot provide the down payment assistance funds for a property that they're selling. They can work with a non-profit organization and transfer that property to the organization and then the city can, uh, provide the down payment assistance.

[WEBINAR 06-29-10]05:17:24 RICHARD (CONTINUED) But it cannot come directly from the—with that in mind, there are ways to structure this so that you can, uh, use the funds but again the funds cannot come directly from the seller. And then with the closing


costs, uh, NSP grantees can pay just about any reasonable closing costs with NSP funds. There's, there's really no limitation there as long as it's reasonable. There is a limitation on the FHA side that they can go to a maximum of 6 percent of the sales price.

[WEBINAR 06-29-10]05:18:02 RICHARD (CONTINUED) So you need to keep that in mind that, uh, there are some limitations, uh, between the two programs. The NSP pays for all the, uh, the closing costs that are reasonable, limited to 6 percent with FHA. So we sort of hit on this, um, when you're combining the assistance again as Lisa explained that there's really no limitation on how many liens that you can stack on a FHA loan. They just need to be constructed properly, uh, and of course they need to be in the proper order depending on the type of funds that you're using or the requirement of the, of the entities that are giving the funds.

[WEBINAR 06-29-10]05:18:45 RICHARD (CONTINUED) But with an FHA they're very flexible about what you can use as long as it's, it's approved, um, for use through a governant—government entity or public entity. And this is, uh, when we're working with a 203 K loan, this is one of the other benefits is that you can have a higher combined LTD. It's generally, uh, you're limited to a 110 percent LTD on a property. But you can increase that so it gives you some flexibility working with the 203 K program when you have, uh, …

[WEBINAR 06-29-10]05:19:28 RICHARD (CONTINUED) There are some limitations on the, uh, the NSP side when you're dealing with a higher LTD in that you cannot use NSP funds or CDBG funds to escrow for repairs that aren't complete. Uh, in general you have to complete and, uh, then rever—reimburse. And so where for a 203 K you're escrowing funds you can't use your NSP dollars to do that. So you need to keep that in mind and rather in a situation where you need to escrow funds it may be better to use a type of 203 K loan

[WEBINAR 06-29-10]05:20:03 RICHARD (CONTINUED) And then use your NSP monies to subsidize the program in another way and, and, uh, again there's a number of ways that you can do that to assist the, the buyers of the, the homes. Now when we're dealing with FHA there is a limitation on the income and, uh, FHA says that you can, uh, get an exception to that so that you can go up to a 120 percent that NSP requires. Right now, FHA doesn't allow above a 115 percent.

[WEBINAR 06-29-10]05:20:42 RICHARD (CONTINUED) And if you go to your, your local hoc and you work with them, that you can get an exception, it goes to a 120 percent fee equal with your NSP dollars. So the flexibility that an FHA offers with their product will allow you to match the requirements for the underlying NSP dollars in this instance. And we have the link here. Now don't forget, this is something that you have to get preapproval for. You just can't go out and exceed the FHA income limits.

[WEBINAR 06-29-10]05:21:17 RICHARD (CONTINUED) So at this point before we talk about the lottery program, is there any questions, uh, Kent, that you can see we need to, to address?

[WEBINAR 06-29-10]05:21:26 KENT Uh, no new questions yet. This is a reminder again you can click to your raised hand button under the participant list or use the Q&A function to submit questions.

[WEBINAR 06-29-10]05:21:41 RICHARD So HUD has a number of ways that you can purchase FHA products and one of them is through the lottery program. And in order to participate in the lottery program you have to be an approved non-profit


as we discussed before. And once you're approved you can work with FHA to purchase their properties. And basically, this, this gives you—puts you almost in a first look situation and this is really a significant benefit in that you're not competing with, um, with developers.

[WEBINAR 06-29-10]05:22:14 RICHARD Or investors for the property at this point. You're not competing with even individual home buyers at this point. You do have a first look at the property. The properties held off, uh, the general market for five days, uh, indicate interest. And then once you indi—indicate interest there is a discount that's associated with purchasing through the lottery program as a non-profit. And, uh, the discount is either 10 percent or 30 percent of the value of the property.

[WEBINAR 06-29-10]05:22:44 RICHARD (CONTINUED) So there's some significant benefits to operating with the FHA program as an approved, uh, non-profit organization. There's also a competitive sales program and this gives, uh, again, it—an exclusive first look for …the units of a local government and owner occupant. And this is a 10 day window that's, uh, available. And, and you get the same type of discount with this but, uh, you are in that same window with owner occupant.

[WEBINAR 06-29-10]05:23:21 RICHARD (CONTINUED) So again, another opportunity to purchase these homes from FHA and—and we work with programs where we have worked with FHA and received this discount and it goes a long way to improving the feasibility of, of the project that you're working on in that it—by decreasing your acquisition cost you can actually increase the amount of funds that you can roll into the project as rehab and produce a better product and sell it more affordably to the end user. So this is a way to—to increase the affordability of the product overall.

[WEBINAR 06-29-10]05:24:03 RICHARD (CONTINUED) Uh, the—the complexity of working with HUD sometimes is, you know, can be daunting. But when you're working with these programs, the benefits that you can get out of them are offset, any complexities that may come up. And once that you are approved as the non-profit, uh, to work with the programs, you have your systems and processes in place, this actually becomes a fairly simple program to work with. And the partners on the HUD side that we've worked with have been, uh, very helpful in, uh, processing the files that, uh, we've worked on through these programs.

[WEBINAR 06-29-10]05:24:43 RICHARD (CONTINUED) Uh, one of the other programs they have is the bulk sales program and this is an NSP activity. And in order to participate, again, you have to be a NSP recipient and you have to purchase up to ten properties. Now there's--there's no minimum purchase amount or, uh, value to the properties. You have to purchase ten of them. Again, this—this is a real opportunity to work with HUD and FHA to do access properties on a—on a small bulk level. Uh, a lot of lenders that you would approach to purchase bulk sales of properties do not consider ten properties as a bulk purchase.

[WEBINAR 06-29-10]05:25:23 RICHARD (CONTINUED) You have to buy significantly more properties than that. So when you're dealing with your NSF, uh, buy properties on a bulk, this is a good opportunity. And the bulk sales program, there are significant discounts when you're working in this program. If, uh, your appraise value is greater than a $100,000 dollars you get a ten percent discount. And this is a as is appraised value of the property as established by HUD.


[WEBINAR 06-29-10]05:25:51 RICHARD (CONTINUED) Uh, if it's, uh, less than a $100,000 but greater than, uh, $20,000 you get a 50 percent discount. And if it's less than $20,000 dollars in value, basically it's considered a demolition and you purchase that property for a $100 dollars. Um, the properties remain in—in the—the standard sales process that they have at a competitive sales program during the availability period for the bulk sales program. But again, when you look at this and you're looking at trying to have a significant impact in the neighborhood.

[WEBINAR 06-29-10]05:26:24 RICHARD (CONTINUED) And properties may, uh, require higher levels of repair, this si the way to purchase them at a discounted amount that will allow you to, to repair those properties. And so, uh, again another, uh, valuable tool, uh, to use for NSP to really stabilize community. And then last but not least, there's the dollar home program and this—this is available to local government. And—and what this does is this helps clear off the properties that have been inventory for six months.

[WEBINAR 06-29-10]05:27:03 RICHARD (CONTINUED) And some areas, I know that there—there may be a lot of these properties out there but others there's very few. Uh, but it's an opportunity to pick up properties that are either in, uh, in areas where they're not selling or that are in such poor condition that nobody is purchasing them. Uh, and it's a final—one of those final disposition strategies that HUD has, but it is that, that neighborhood, uh, comprehensive neighborhood stabilization that as you're looking at a neighborhood.

[WEBINAR 06-29-10]05:27:31 RICHARD (CONTINUED) And you're seeing some of these houses that have been out there for a long time, if you had to purchase them at the, uh, the market value and sometimes even with the discounts that are available through the HUD program, they still not—might not be feasible or they, uh, would require significant amounts of subsidy. Uh, when these properties hit six months and you can purchase them for a dollar then they, again, become very financially feasible to work with even if you're doing a demolition program.

[WEBINAR 06-29-10]05:28:04 KENT So we, we do have a question here from, uh, Sam about the lottery, Um, and asking when does the lottery time period of five days start; at the time of general listing or earlier? And he goes on to say that he represents the municipality but were not receiving advance notice and having to go through a realtor. And we get the ten percent discount but have to pay, um, commission.

[WEBINAR 06-29-10]05:28:33 RICHARD Why don't we have, uh—it sounds like Doug may be the one to answer that. Doug, does that fall on your—under your specialty?

[WEBINAR 06-29-10]05:28:40 DOUG It does and, um, if the question is if, uh, when it will be made available for sale under the lottery before made available under competitive sales then I guess the answers yes. But it sounds like the real question has to do with notification of the availability of properties under the lottery program. Is that accurate?

[WEBINAR 06-29-10]05:29:09 RICHARD It sounds like that but let me—Doug, let me turn that question around a little bit.

[WEBINAR 06-29-10]05:29:13 DOUG Okay.


[WEBINAR 06-29-10]05:29:14 RICHARD If, if I am a municipality and I'm interested in participating in this program, what steps must I go through in order to ensure that I am getting proper notification or that, uh, uh, or the process that I have to enter into to make sure that I am in—availing myself to this program.

[WEBINAR 06-29-10]05:29:36 DOUG Uh, the immediate steps that come to mind would be to make contact with the, uh, home ownership center that has jurisdiction over your community and their, uh, REO division. Uh, that the staff from that division can, uh, facilitate a dialogue with the, uh, contractor that is managing the listing and sales of FHA/REO properties in your community and if you are somehow not given timely information about the availability of properties to purchase under any of these special disposition programs for non-profits and units of local government, um, those would be your first stops.

[WEBINAR 06-29-10]05:30:24 DOUG (CONTINUED) The home ownership center and this contractor to make sure that, that you are getting the—that appropriate notification.

[WEBINAR 06-29-10]05:30:33 RICHARD Now when they're buying directly as a unit of local government or as a approved non-profit, uh, do they have to use a realtor?

[WEBINAR 06-29-10]05:30:46 DOUG Um, that's—I don’t believe so, um, because those programs are set aside specifically for those purchases and it--because—especially for the non-profits they've been approved, the participant under the program, I don't believe those need, uh, to be facilitated through a realtor but I can confirm that and, uh, give you that information to disseminate.

[WEBINAR 06-29-10]05:32:18 RICHARD I, I believe—I believe that's correct. Mark Spence has been with the programs that we've worked with as a non-profit. And we work directly with HUD's local property management contractor to, uh, process the contract and to move through closing so, um, I believe that's the case so if, if we—if somebody is working through a realtor then it sounds like maybe as you explained the best thing to do is to go back to your local hoc and have that discussion.

[WEBINAR 06-29-10]05:31:52 RICHARD (CONTINUED) Make sure that you have everything in place that you need in order to purchase say directly as a, uh, as a unit of local government, uh, for the process.

[WEBINAR 06-29-10]05:32:03 DOUG Right.

[WEBINAR 06-29-10]05:32:07 RICHARD So...

[WEBINAR 06-29-10]05:32:07 KENT I have another question about the lottery from Patricia and I'm going to unmute you, Patricia. Um, can you ask your question? Patricia, are you there?

[WEBINAR 06-29-10]05:32:21 PATRICIA Can you hear me?


[WEBINAR 06-29-10]05:32:18 RICHARD Yes.

[WEBINAR 06-29-10]05:32:25 PATRICIA Um, when the program are these properties, um, those that already have environmental reviews and would be properties eligible for other, uh, programs that requires a review like a subsidy program?

[WEBINAR 06-29-10]05:32:49 RICHARD Well, yeah, I mean, part of this discussion is mainly about the use of NSP funding to purchase, um, or at least to help purchase FHA properties and, uh, that is already happening across the country and, um, as far as the environmental review goes on the FHA side of the transaction there are only a couple of specific types of review that FHA is required to conduct before it can execute, um, a purchase contract.

[WEBINAR 06-29-10]05:33:16 RICHARD (CONTINUED) Now, uh, a grantee, a HUD grantee on the buying side of the transaction that is using other government funding may have additional environmental responsibilities that it must fulfill before the funds can be committed and expended for the acquisition. Does that answer your question, um--

[WEBINAR 06-29-10]05:33:42 PATRICIA Yes, thank you.

[WEBINAR 06-29-10]05:33:43 DOUG Um hm. So, so don't make the assumption when you're working with FHA programs that you're environmental review requirements have been met by FHA.

[WEBINAR 06-29-10]05:33:53 RICHARD Yeah, that's an excellent point. That's exactly right.

[WEBINAR 06-29-10]05:33:56 DOUG Right. In general they have not. FHA does not have to meet the same level of environmental review to sell the property as we do either under CDBG or FHA. (ALL TALKING AT ONCE) Yeah, did I say NSP?

[WEBINAR 06-29-10]05:34:12 RICHARD Yeah.

[WEBINAR 06-29-10]05:34:13 DOUG Through NSP or, uh, other programs that we're working with. Thank you.

[WEBINAR 06-29-10]05:34:20 KENT Let's go to Nikki who's, uh, got a hand raised. Nikki, are you there and where are you calling from? Hello, Nikki? Um, so, uh, go ahead, Richard. That's it.

[WEBINAR 06-29-10]05:34:50 RICHARD Kent, did we catch all the write in questions? It looks like we may have a couple.

[WEBINAR 06-29-10]05:34:55 KENT Uh, one, one more about, um, rehab in Lairing, are you interested in that?

[WEBINAR 06-29-10]05:35:00 RICHARD Yeah, let's, let's go ahead and answer that quickly at this point. Let's go ahead and answer that one.


[WEBINAR 06-29-10]05:35:05 KENT Okay, so, uh, Maureen asks, uh, please elaborate about NSP rehab funds using the 203 K. We have a $50,000 dollar rehab subsidy we want to layer into the 203 K. Our lenders are saying FHA does not allow this. Uh, we also must control the rehab work that funded this.

[WEBINAR 06-29-10]05:35:28 RICHARD Uh, Lisa, would you like to, to try and respond to that?

[WEBINAR 06-29-10]05:35:31 LISA Sure. This is a—this is a hairy one, (LAUGH) needless to say and, and thanks for the question, Maureen. Um, bottom line is is that, of course, with a 203 K transaction, uh, that escrow account is managed by the lender. Um, but—so in regards to having the ability where you would be able to manage the escrow account and manage the funds, uh, of course, the deed, uh, the deeds of first, that's the issue.

[WEBINAR 06-29-10]05:36:00 LISA (CONTINUED) That would not be permissible, uh, under the 203 K program. Um, in regards to the $50,000 dollar rehab subsidy, again, the direction goes to looking at how is the transaction, what is the proper structure for that transaction, um, and in regards to this $50,000 I would be saying, you know, look and see whether or not, if you would be able to utilize the subsidy first towards the 6 percent that is permissible under the closing costs, uh, in regards to utilizing that subsidy as being a second mortgage type of a situation.

[WEBINAR 06-29-10]05:36:41 LISA (CONTINUED) That may be possible as long as the non-profit or the entity that is selling that property, uh, is not the ones who are, of course, would be, of course, holding that second mortgage. That would not be permissible. um, so, you know, that—this one here it does have some issues in regards to being able for, uh, this, um, to be accessible under the 203 K. Um, Maureen, I more than welcome you to go ahead and forward to me your contact information.

[WEBINAR 06-29-10]05:37:13 LISA (CONTINUED) And I'll follow up with you either la—later on today or tomorrow to try to provide you additional assistance for us to figure out what we'd be able to structure in regards to this, uh, in, in regards to this. Um, also let me just go ahead and do a reminder in regards to 203 K program. The 203 K program is for rehab only. Um, the property must be completed. It has to be completed more than one year, uh, proceeding the date of the application for mortgage insurance.

[WEBINAR 06-29-10]05:37:47 LISA (CONTINUED) So considering of course the state of the economy we have been receiving a lot of questions in regards to projects, in regards to new homes that have not been completed and whether or not the 203 K program would be able to be, uh, utilized for those purposes and it would not be, so just an FYI.

[WEBINAR 06-29-10]05:38:07 RICHARD Lisa, along those lines, it, it, is it just a completion issue or had it—does the house have to been owner occupied at some point?

[WEBINAR 06-29-10]05:38:18 LISA It must be completed. Um, and looking at where it has to be completed and again that issue, a minimum period of one year from the date of insured.

[WEBINAR 06-29-10]05:38:32 KENT And, uh, we also have a question here from, uh, Tim. I'm going to unmute you, Tim, and where are you calling from?


[WEBINAR 06-29-10]05:38:39 TIM From Lafayette, Indiana.

[WEBINAR 06-29-10]05:38:43 KENT Very good, thanks. And, uh, what's your question?

[WEBINAR 06-29-10]05:38:46 TIM Well, my question was more of an underwriting question although I do have a clarification point maybe on this, uh, property has been completed for a year after, uh, or before you can do a 203 K; does that year run with the certificate of occupancy? Does it have be a year after the C of O is issued?

[WEBINAR 06-29-10]05:39:06 LISA Um, yes. You have to go ahead and prove that the property is fully 100 percent complete.

[WEBINAR 06-29-10]05:39:13 TIM So it does have to be occupied just to have the C of O issued?

[WEBINAR 06-29-10]05:39:16 LISA You, you got it. You go it.

[WEBINAR 06-29-10]05:39:18 TIM My underwriting question, if this is the time to ask it, deals with, um, selling a property to an FHA, uh, borrower who's going to be under a 100 percent of area median income, is FHA making any allowances in underwriting standards for credit score standards and so forth?

[WEBINAR 06-29-10]05:39:37 LISA Um, uh, I'll go ahead and I'll address this question. It—in regards to credit scores agency we do not have a credit score requirement except of course with dealing with a credit score of being a minimum of 500 for LTVs that, um, would be greater than 90 percent. Um, in regards to the industry, however, the agency does recognize that our lending partners are out there and they, of course, are trying to protect their interests with having credit score requirements.

[WEBINAR 06-29-10]05:40:09 LISA (CONTINUED) But as us as being agency again our credit score requirement, uh, is dealing with, uh, LTVs greater than 90 percent, minimum credit score 500.

[WEBINAR 06-29-10]05:40:18 TIM Well, what, what we're running into is minimum credit scores of 680 to 720 being required by secondary market investor—doing anything to put some pressure on these investors to make them understand that these are NSP buyers, have them modify that to any degree?

[WEBINAR 06-29-10]05:40:35 LISA Yeah, the, the credit score issue is a, is a tremendous, um, issue. Again, we do not dictate what transpires in the secondary mortgage market. The commissioner as well as the secretary, they do pay very close attention in regards to, uh, the secondary mortgage market and what is currently transpiring. Uh, I cannot comment in regards to, uh, the commissioner or the secretary or any type of activity. Um, but however I can tell you they are constantly monitoring what is transpiring in that secondary market.

[WEBINAR 06-29-10]05:41:116 TIM Okay, thank you.


[WEBINAR 06-29-10]05:41:11 LISA You're welcome.

[WEBINAR 06-29-10]05:41:14 RICHARD In--

[WEBINAR 06-29-10]05:41:15 KENT And another underwriting question from Rachel who asks are there limits on the amount of soft second dollars that non-profits can offer to home buyers at closing?

[WEBINAR 06-29-10]05:41:28 LISA Alrighty, it, it's Lisa again. Um, hi Rachel. In, in regards to the number of dollars, no. Um, it, again, you can have multiple liens as well as you, of course, there's no CLTV limitation. However, again, you'll have to refer back to the 4155 to be able to make sure that those liens that are going to be held against the property are going to be acceptable per, of course, FHA guidance.

[WEBINAR 06-29-10]05:42:16 MALE And, and then I would just add from an NFC standpoint that you want to make sure that you're not, um, providing an undue enrichment to that buyer. So you're in compliance with, uh, with, uh, a, a, uh, 37, I believe it is.

[WEBINAR 06-29-10]05:42:18 RICHARD In, in many—from the, the practical side of that question is that when you're dealing with your lenders there, there is a minimum that most of them will work with as far as the amount of mortgages, not the mortgage itself. So, you know, if you over subsidize the property to a point where, uh, the lender you're dealing with cannot, uh, its not financially feasible for them to process that pile, uh, that can be an issue. I know that in our area generally we're, we're a relatively low cost housing area here in Dallas where I'm at.

[WEBINAR 06-29-10]05:42:54 RICHARD (CONTINUED) And it's difficult for us to get mortgages on properties that are less than $50,000 dollars. So there is a practical side to that question in addition to the, uh, the question associated with FHA and NSP on that. Okay. So if there's no more questions in that area we'll move on. Uh, another potential source of properties is the National Community Stabilization Trust and HUD, uh, to, uh, process properties through it's through it's processes that it has.

[WEBINAR 06-29-10]05:43:33 RICHARD (CONTINUED) And if you're interested in working with the HUD, there's a—excuse me, with the NCST there are a couple things you need to keep in mind. One is that, uh, you have to work with a broker that has a NAID number and that is the, the number that is assigned to the brokers that are signed up and approved to, to sell, uh, the FHA foreclosed property. Uh, and the trust, uh, does not have the same ability to transfer properties directly to a non-profit or a, uh, governmental entity that, uh, you can when you're dealing directly with FHA.

[WEBINAR 06-29-10]05:44:14 RICHARD (CONTINUED) And so you have to have the NAID, you're going to have to work with a broker, either have one on staff or an independent broker to access these properties through the HUD—through the NCST right now. And when you're working with, uh, the trust they will provide, periodically provide a list of properties and that's done weekly and then the bids will come through them for the properties. And again, they—they really want to stress that unlike working directly with FHA, that you have to have a NAID number.


[WEBINAR 06-29-10]05:44:45 RICHARD (CONTINUED) Now the benefit of working with the trust from what I understand is that you do not have to be an approved non-profit entity, uh, to work with the trust to purchase, uh, FHA property. That is the one benefit there. And I would suggest that if, if you wanted to give more information, uh, about the trust and it's processes that you go ahead and contact them directly. So to wrap up we have some, uh, some resources that are available.

[WEBINAR 06-29-10]05:45:19 RICHARD (CONTINUED) And, uh, most of you should be aware of the HUD website I would hope and, and the, the, uh, tremendous resources that are out there. There are, uh, and a few changes that are—there are pages out there. They give you all the information you need for the, um, FHA programs working with non-profits, how to be approved, and how to, to work with, uh, HUD on those programs. So it's always a very good first source of information.

[WEBINAR 06-29-10]05:45:47 RICHARD (CONTINUED) I will also say again that, that our—your local hocs would, uh, be very useful and, and helpful and supportive of your applications to use, um, the FHA programs to help clear their inventory and support your programs.

[WEBINAR 06-29-10]05:46:36 DOUG Richard, I'd like to submit another, uh, link. Um, I hope this is something that everybody can view. But it's, um, a link to a page on the FHA website for non-profit, uh, resources and programs. Is that—is that visible to all the participants?

[WEBINAR 06-29-10]05:46:25 KENT Unh unh, how about if you—on the chat…


[WEBINAR 06-29-10]05:46:30 KENT Yes, if you look in your chat, uh, window that link is there. Thank you, Douglas.

[WEBINAR 06-29-10]05:46:35 DOUG Um hm.

[WEBINAR 06-29-10]05:46:37 RICHARD And it should be in the middle on the right hand side of your screen. So, uh, there's some, again, some tremendous resources out there that HUD has. So, uh, just sort of as a wrap up before we go to final questions, um, working with FHA programs can go a long ways to help and improve the, uh, the financial feasibility of some of the projects you're working on and also improving the affordability to our in home buyer user.

[WEBINAR 06-29-10]05:47:05 RICHARD (CONTINUED) Uh, when this is combined with NSP you can really, uh, expand your ability to do comprehensive neighborhood stabilization which is really the goal of the program. Uh, there are, uh, benefits to, uh, the municipalities and to the non-profit organizations from working with, with HUD on, uh, their FHA programs. And there's also benefits to the home buyers. Uh, there, uh, there's always challenges, uh, working with governmental entities.


[WEBINAR 06-29-10]05:47:37 RICHARD (CONTINUED) But it is my opinion that those challenges in the processes you have to go through to get approved are, uh, are worth going through for the benefits that you can get from working with these programs. Remember that as an approved non-profit agency that you, in some instances you have first look and exclusive first look privileges, uh, at the properties that HUD has in its FHA inventory. And not o—that there are significant discounts that you can get which you can use to pass on to the home buyer.

[WEBINAR 06-29-10]05:48:12 RICHARD (CONTINUED) And improve the affordability. So I would say to everyone that these, these types of programs are worth considering and worth exploring and worth figuring out how to tie it to the NSP, but not only to NSP, that you're working with in your, in your local, your local areas. So, uh, having sort of said that as a wrap up, um, are there any other questions, Kent, that you see out there that we need to ask, uh, or answer?

[WEBINAR 06-29-10]05:48:41 KENT Indeed there are. And, uh, Gary has been waiting patiently. Gary, where are you calling from and what's your question?

[WEBINAR 06-29-10]05:48:49 GARY Uh, Tucson, Arizona and the question is that, uh, I'm in a NSP consortia where a, uh, community land trust is participating and we have been told that, uh, FHA will not loan to buyers with the—in a land lease situation which is how the, uh, community land trust operates. Is this correct and is FHA working on any way to change that policy?

[WEBINAR 06-29-10]05:49:20 RICHARD And that maybe a question for Lisa. (ALL TALKING AT ONCE)

[WEBINAR 06-29-10]05:49:23 LISA Hi. Hi Gary. Yes, we are. We are looking at the land lease situation. In fact, one of my fellow credit policy, um, specialists are in fact working with the, um, deputy assistant director, um, as well as the commissioner and we are reviewing this. Um, so, um, by all means, it is something in which we are looking into.

[WEBINAR 06-29-10]05:49:54 RICHARD Lisa, I don't mean to put you on the spot but I'm going to ask the question.

[WEBINAR 06-29-10]05:49:57 LISA Okay.

[WEBINAR 06-29-10]05:49:58 RICHARD Uh, okay, uh, time frame on that, what do you think?

[WEBINAR 06-29-10]05:50:03 LISA If I knew that, would I be sitting here? You know, it, it's, it's very, it's very difficult. With that type of, um, guidance, of course, we're having to deal with the, uh, with their attorneys and so and so forth. Uh, but I know that the good thing is, is that the agency has recognized this and we are looking into it.

[WEBINAR 06-29-10]05:50:28 RICHARD So, so the practical side to that answer is that if you're working in a program now where you are trying to, uh, avail yourself of FHA, uh, products in this situation it probably is not going to happen for a while.


[WEBINAR 06-29-10]05:50:46 LISA You got it and, and, um, and whether or not it's going to happen at all. Um, so you know, when we go ahead and when we do changes to a product or when we're in—introducing a product especially and, of course, with dealing with this land lease situation our attorneys are very much involved in, in regards to this process. Um, so it's—it does take a, uh, definitely a period of time.

[WEBINAR 06-29-10]05:51:10 RICHARD Okay.

[WEBINAR 06-29-10]05:51:13 KENT And, uh, we've got Cara with us and where are you from, Cara?

[WEBINAR 06-29-10]05:51:19 CARA Uh, Contracosta County, California. Can you hear me?

[WEBINAR 06-29-10]05:51:23 KENT What's your question?

[WEBINAR 06-29-10]05:51:24 CARA Uh, my question is with the NSP, that, uh, the NSP program isn't considered convincing if the houses are purchased and sold within 90 days. We've been having a hard time finding lenders that will accept that waiver because they're telling us that they haven't gotten that waiver from FHA.

[WEBINAR 06-29-10]05:51:43 RICHARD Well, that waiver is in effect through, uh, February of next year and should allow NSP purchasers to acquire and resell single family properties, uh, within a 90 day period. So, um, if you would like to, you can email me directly. Um, that my email information was just up on the site a few min—moments ago and, um, I'll be happy to respond with information about, uh, the waiver, how it applies, and so forth.

[WEBINAR 06-29-10]05:52:20 CARA Well, I guess my question, we seem to understand it but we're not convincing the lenders that it's—that it's legitimate. So I think--

[WEBINAR 06-29-10]05:52:27 RICHARD Well, you're saying that they haven't received notification directly from FHA?

[WEBINAR 06-29-10]05:52:32 CARA Correct. And--

[WEBINAR 06-29-10]05:52:33 RICHARD Well, maybe that's what they are in need of before they will believe what they're being told. Um, in which case that could be something as simple as facilitating a telephone call from the, uh, Santa Ana home ownership center, um, to set them straight to so speak.

[WEBINAR 06-29-10]05:52:53 CARA Okay. Right--

[WEBINAR 06-29-10]05:52:54 LISA But, um, Doug, Douglas, it, it's directly the, the waiver itself is on the HUD dot gov--



[WEBINAR 06-29-10]05:53:01 LISA And then you just have to hit search and then they do waiver. I think that the lenders are possibly thinking that we're going to be doing some type of a mortgagee letter, um, announcing the waiver. And, and currently that is not, uh, we are not proposing to go ahead and do a mortgagee letter in regards to that waiver. Um, it—and also even though that we are going ahead and which we are waiving the 90 day flipping rule, some of the lenders out there, of course, they may elect not to follow.

[WEBINAR 06-29-10]05:53:35 LISA (CONTINUED) Um, so, uh, Cara, I don't know if that is your situation in regards to the lenders? Are they looking for a mortgagee or do you feel it's just--

[WEBINAR 06-29-10]05:53:43 CARA (OVERLAPPING) I, I think I, I think they've been looking for a mortgagee letter.

[WEBINAR 06-29-10]05:53:46 LISA Yeah, yeah, and, and, and again, it's a waiver. It's on the website. Um, a mortgagee letter at this point and time, it's not proposed that we're going to be releasing one. Typically we don't in regards to waivers. Um, so they just need to go to that HUD dot gov or by all means they're able to call for a resource at 1-800-CALL-FHA and, uh, they're able to also go ahead and confirm the waiver and the existence of such.

[WEBINAR 06-29-10]05:54:14 RICHARD Um hm.

[WEBINAR 06-29-10]05:54:14 CARA Great, thank you.

[WEBINAR 06-29-10]05:54:16 LISA You're welcome. Thank you.

[WEBINAR 06-29-10]05:54:25 KENT Let's see, other questions, we've got, uh, one from John here and I'm going to unmute you, John. Where are you calling from?

[WEBINAR 06-29-10]05:54:35 JOHN Uh, Brooklyn Park, Minnesota.

[WEBINAR 06-29-10]05:54:40 KENT And, uh, go ahead with your question.

[WEBINAR 06-29-10]05:54:42 JOHN Yeah, I was--we've been at--we are working with a for profit developer and, uh, we have a purchase agreement that was signed or that, uh, that we sent over the, uh, NSP purchase agreement addendum and best asses—best assets is not signing that. Has there been any issues in that or how do—how would we go about, um, complying with that, uh, regulation?

[WEBINAR 06-29-10]05:55:13 RICHARD Which regulation are you referring to?


[WEBINAR 06-29-10]05:55:16 JOHN The, uh, purchase, uh, the NSP addendum which, um, just basically notifies the, uh, uh, the, the, that we will not purchase without a—without eminent domain so that it would—basically shows that we have a—that we're buying the property that, that when we get the appraisal it'll be at less than one percent or one percent market value that the, uh, uh, that the lender understands that the uniform relocation act, uh, that tenants weren't in there for the previous, uh, three months.

[WEBINAR 06-29-10]05:55:51 JOHN And that there's no environmental infraction that we can back out if any of those aren't complied with.

[WEBINAR 06-29-10]05:56:09 RICHARD Um, David, is that something you feel like you can speak to?

[WEBINAR 06-29-10]05:56:13 DAVID Um, it, I'm, I'm, I'm listening to it. I, I don't—it doesn't sound like something that, that we require. Um, what you're—what you're asking for is, is will you an option to back out if you're not provided with this information or if it's not provided to your satis—satisfaction, is that right?

[WEBINAR 06-29-10]05:56:34 JOHN Correct.

[WEBINAR 06-29-10]05:56:36 DAVID Yes, so it's—so I think it's more of an FHA question. From, from, from what I've heard in talking to you in the past, Doug, I didn't think you were offering that sort of a certification. But, um--

[WEBINAR 06-29-10]05:56:48 DOUG No, there's nothing officially available through FHA to recognize a contract contingency like that.

[WEBINAR 06-29-10]05:56:58 DAVID So, is there, is there anything—so I, I, I guess the oness is really placed upon the grantee to do their, um, their due diligence on the property to insure that, um, you know, if it--it's in compliance with the NSP rules. (ALL TALKING AT ONCE)

[WEBINAR 06-29-10]05:57:20 JOHN Right, and that's what we've been doing.

[WEBINAR 06-29-10]05:57:23 DAVID Yeah.

[WEBINAR 06-29-10]05:57:23 JOHN Uh, or with at least—this is the first HUD home that we've looked at purchasing and that's what we've done basically is we have some internal ways to find out if its been homesteaded or, um, if there's, you know, how long it's been vacant for.

[WEBINAR 06-29-10]05:57:37 DAVID Right.

[WEBINAR 06-29-10]05:57:38 JOHN So we've used that and then we, we documented it that way.


[WEBINAR 06-29-10]05:57:41 DAVID Yeah, yeah, and we wouldn't require you to, to have a certification. Um, so, so I wouldn't worry as much about that, you know. If, if you could get it from FHA that would be great but it doesn't sound like they--that's something that they offer.

[WEBINAR 06-29-10]05:57:57 JOHN Okay. Yeah, thank you.

[WEBINAR 06-29-10]05:57:59 KENT Thank you, John. And, uh, let's go to Jesse. And Jesse where are you calling from?

[WEBINAR 06-29-10]05:58:07 JESSE Hi, it's Jesse calling with NeighborWorks in D.C. Uh, I just have a quick question about two of the programs you guys went over. Could you explain to me again the differences between the lottery program and the competitive sales program through FHA?

[WEBINAR 06-29-10]05:58:27 RICHARD Doug, would you like to try and answer that?

[WEBINAR 06-29-10]05:58:29 DOUG Yeah, um, I'll just give you the real high level, uh, version. Um, the lottery program is for specific kinds of entities and home buyers. So the entities are—is the local government, non-profits and then what FHA refers to as good neighbors which are really specific kinds of, uh, civic employees, uh, specifically policemen, firemen, teachers, and, uh, emergency medical techs. Um, whereas competitive sales are, you know, bidders, eligible bidders can include non-profits and entities of local government.

[WEBINAR 06-29-10]05:59:15 DOUG (CONTINUED) But the owner occupants who submit this do not have to qualify as good neighbor.

[WEBINAR 06-29-10]05:59:24 JESSE Okay. What about the competitive sales opens it up in addition to the, the current owner occupant.

[WEBINAR 06-29-10]05:59:32 DOUG Correct.

[WEBINAR 06-29-10]05:59:33 JESSE Okay. Thank you.

[WEBINAR 06-29-10]05:59:40 KENT Thank you, Jesse. And, uh, Meredith. Uh, go ahead and ask your question.

[WEBINAR 06-29-10]05:59:49 MEREDITH Yes, I'm, I'm from Estonia County, Florida and I was just wondering with the new RESPA requirements, are there, um, are there any things we should be doing as far as submitting good faith estimates in relation to our NSP second mortgages we're providing.

[WEBINAR 06-29-10]06:00:14 LISA We have silence on the line. Hi, Meredith, it, it's Lisa. Just FYI, I saw your question and I've gone ahead and I forwarded it over to our RESPA department. So, um, as soon as I have a response back I'll go ahead and I'll, I'll forward it over to, of course, um, over to Ken and then he'll be able to, um, provide.


[WEBINAR 06-29-10]06:00:32 CARA Thank you.


[WEBINAR 06-29-10]06:00:38 KENT And, uh, thank you, Lisa. Let's see, um, there's one--there's a, another Lisa. Lisa, where are you calling from?

[WEBINAR 06-29-10]06:00:50 CARA From Naples, Florida.

[WEBINAR 06-29-10]06:00:53 KENT Ah, another Floridian and what's your question?

[WEBINAR 06-29-10]06:00:56 CARA My question is does FHA loans require mortgage insurance for loans that are less than 80 percent on the value?

[WEBINAR 06-29-10]06:01:08 LISA Um, hi, it's, it's Lisa, Lisa. Good afternoon. And, uh, and the answer is it depends on the program. Um, it depends on the term. Uh, specifically the answer if you're going into a 30 year fixed rate mortgage and, uh, is it—the answers going to be yes. Uh, our cutoff is at 78 percent, not 80 percent. Um, and if you're going into a loan in which is a 15 year term or less and it's less than 78 percent, it—the, the answers going to be no.

[WEBINAR 06-29-10]06:01:43 LISA (CONTINUED) Um, but however, again go to the 4155.1 and that will be able to give you the information in regards to the mortgage insurance requirements as well as the 4155.2. There were--

[WEBINAR 06-29-10]06:01:58 LISA 4155.2.

[WEBINAR 06-29-10]06:02:00 LISA Right. And pop in the, um, section in which is the chat. I went ahead and I provided two links. The first link that came from me was in regards to the 203 K and the second link is giving you information in regards to our handbooks.

[WEBINAR 06-29-10]06:02:19 LISA Okay, thank you.


[WEBINAR 06-29-10]06:02:23 KENT Thank you and who's next? Looks like, uh, Valerie. Hi Valerie.

[WEBINAR 06-29-10]06:02:31 VALERIE Hi, how are you? My question is in regards to the appraisal process with FHA's financing. Um, we are, uh, getting, um, FHA appraisers to actually conduct our after rehab appraisal. But the problem that we're


coming up with is that the appraisals ordered by the lenders are coming in significantly lower than the appraisals that we're getting ordered by FHA appraisers. When I say significantly I mean, I've had an, an appraisal that was done two weeks apart where our appraisal came in at 155 and the next appraisal came in at $96,000 dollars.

[WEBINAR 06-29-10]06:03:05 VALERIE (CONTINUED) And so I'm trying to find out what relief is there out there in regards to this appraisal problem and is there anything that we can do to get our appraisal accepted by the lenders or to get our appraisals with an FHA case number so that it is assigned to the property?

[WEBINAR 06-29-10]06:03:26 RICHARD Again that sounds like that may be a Lisa question.

[WEBINAR 06-29-10]06:03:29 LISA Yeah, it's, it's very interesting—hi, how are you? Um, here at, here at, uh, HUD just a, an FHY, we actually have our appraisal department which is called evaluation policy division. And our credit policy is two separate divisions. Um, if you will, go ahead forward to me your question and I want to forward that over to our depu—deputy director with evaluation policy division, a gentleman by the name of Robert Witt.

[WEBINAR 06-29-10]06:04:00 LISA (CONTINUED) And, uh, and one, make sure that he's aware of this situation and to see whether or not if we have any, uh, you know, any way to be able to try to address this at this point.

[WEBINAR 06-29-10]06:04:11 VALERIE Okay, we actually did reach out to the, um, the appraisal department at FHA here in the Atlanta area--

[WEBINAR 06-29-10]06:04:17 LISA Okay.

[WEBINAR 06-29-10]06:04:18 VALERIE And, and at length in regards to it. Um, they really didn't have very much guidance that they could do for us because, of course, uh, case number attached to their appraisals so which meant that there wasn't really anything that can be done.

[WEBINAR 06-29-10]06:04:31 LISA You got it. You got it. Now in regards to second appraisal does it show like rehab work? Does it document the reason why you've had a significant increase of value or no? Is it just due to the change of the market?

[WEBINAR 06-29-10]06:04:44 VALERIE Well, when comparing the two appraisals side by side, the comps are completely different. We found that the appraiser that conducted the appraisal on behalf of the bank actually used some of our other NSP acquisition properties with the discount at comp. The property that had been fully rehabbed and so they were pulling acquisitions of NSP properties as their comps for properties that had com—been completely rehabbed. Um, our appraiser, um, did have information regarding to—regarding the rehabilitation that had been done to the house.

[WEBINAR 06-29-10]06:05:15 VALERIE (CONTINUED) Um, but the comps that were pulled in the exact same area were just very, very different; drastically different. And you know, we were just surprised. I mean a $10,000 dollar, we understand that could be


possible. But to have a, over a $60,000 dollar difference and again, the appraisals were done within two weeks of each other, both by FHA approved appraisers.

[WEBINAR 06-29-10]06:05:34 LISA Right, right.

[WEBINAR 06-29-10]06:05:35 VALERIE (OVERLAPPING) It just blew our mind and the problem that we're having right now is that now we're upside down in the property.

[WEBINAR 06-29-10]06:05:40 LISA Absolutely, absolutely. And I hate to say it, from what you're describing it's going to be very difficult due to the timeframe as well as trying to, um, justify the increase of value. And because of two FHA approved appraisers. But by all means, if you will, please forward to me, uh, your information as well as the case number, um, and that would be wonderful and then I'll be able to recruit, uh, the assistance from a evaluation department here at headquarters.

[WEBINAR 06-29-10]06:06:16 VALERIE Okay, great.

[WEBINAR 06-29-10]06:06:16 LISA (OVERLAPPING) To see whether or not what we would be able to do and—and try to, uh, try to provide some type of assistance.

[WEBINAR 06-29-10]06:06:22 VALERIE Ask you this on a side note, is there anything that we can do to get the lenders to utilize our appraisal?

[WEBINAR 06-29-10]06:06:30 LISA No, it--

[WEBINAR 06-29-10]06:06:31 VALERIE No.

[WEBINAR 06-29-10]06:06:32 LISA Yeah, if it causes the issue of dealing with a case number, of course, as you know case numbers are assigned a property address. And, and you've already had an appraisal that has been done to the property. Now you possibly are able to do some type of rebuttal process in which an ML was released. I believe it was last year in regards to this but, however, again, on credit, um, and, uh, and, you know, let me allow and let me, uh, forward over to, to Bob Whit for him to be able to give you direction on that. But there was an ML that was addressed last year.

[WEBINAR 06-29-10]06:07:06 VALERIE But, I, I was actually referring to build in accord with the future properties. Is there anything that we can do—are the lenders allowed to accept our appraisals on other properties going forward if we provide that to them or are they not allowed to accept our appraisal.

[WEBINAR 06-29-10]06:07:20 LISA Who has the case number?

[WEBINAR 06-29-10]06:07:21 VALERIE Well, on properties where there is no case number.


[WEBINAR 06-29-10]06:07:23 LISA And, and that's the issue. It—to, to FHA, a loan is not a loan until when you have a case number. We're—we don't even view an application as being an application with the date signed on the application until once you have a, a case number.

[WEBINAR 06-29-10]06:07:41 VALERIE And the only way to have a case number is to actually have a borrower.

[WEBINAR 06-29-10]06:07:44 LISA You've got it. You got it.

[WEBINAR 06-29-10]06:07:48 VALERIE Okay. Alright, well, I definitely will forward this to you and--

[WEBINAR 06-29-10]06:07:50 LISA (OVERLAPPING) Oh, that will be great.

[WEBINAR 06-29-10]06:07:53 VALERIE Thank you.

[WEBINAR 06-29-10]06:07:53 LISA Thank you.

[WEBINAR 06-29-10]06:07:55 KENT Thanks, Valerie. And, uh, Caroline, where are you calling from and what's your question? Caroline, are you there? She’s not here, so I will take the liberty of asking hers for her. Um, uh, let's see, more of really as a, as a FYI, all FHA loans are insured regardless of loans value otherwise the financing is something else. HUD only insures loans, uh, any comment on that and if that sounds right to you?

[WEBINAR 06-29-10]06:08:36 LISA Yes, we, of course, you know, in regards to, to that comment, of course, we again, you know, we don't lend the money. It comes from Joan. Um, and absolutely in regards to the mortgage insurance we do have , of course, in the issue of where you're dealing with an 80 percent, it's actually 78 percent, um, but however there's a distinction in between upfront mortgage insurance and then of course the annual mortgage insurance which is that monthly MIP figure.

[WEBINAR 06-29-10]06:09:05 LISA (CONTINUED) When you're looking at the time and there's a distinction in between the—the time in which a loan is originated, the number of years in which a borrower has to pay into the annual mortgage insurance, as well as of course when the borrower hits to that 78 percent LTV. Uh, so there's a distinction in between upfront MIP, there's a, a distinction in between the annual MIP and thus that annual MIP goes into the monthly insurance payments. There's also distinctions in regards to the programs when you're doing the streamlined refinance into where you're refinancing a current FHA borrower into a streamlined refinance.

[WEBINAR 06-29-10]06:09:48 LISA (CONTINUED) And so this—this mortgage insurance is a little bit more in detail in regards to how it is applicable when you're dealing with LTVs less than 80 percent. Again I, I direct the direction over to the 4155. In addition to that to reference over to our mortgagee letters as well to be able to give additional information in regards to that mortgage insurance and when this mortgage insurance stops as well as when it is applied.


[WEBINAR 06-29-10]06:10:23 KENT Very good. And while we're waiting to see if there are any more questions out there let me tell you about what's coming up with HUD NSP webinars. Um, they're scheduled to do July 16, uh, right now and we've got these on Tuesdays and Thursdays and, uh, join those the, the same way you joined this one. Let's see, scanning for questions. I don't see any, uh, anymore at this point.

[WEBINAR 06-29-10]06:11:02 RICHARD So each of those hands raised, raised, those were already answered.

[WEBINAR 06-29-10]06:11:07 KENT Uh, those were, yes, um--

[WEBINAR 06-29-10]06:11:08 RICHARD Oh.

[WEBINAR 06-29-10]06:11:07 KENT If you've, uh, asked your question, um, let's see, I'm thinking about, uh, Gary, Jesse, and Valerie. If you guys click your, your lower hand button unless you still have another question to ask. And those went down, uh, theirs is down too. So, uh, that looks like, like the extent of the questions. Uh, Richard, any, uh, any final words?

[WEBINAR 06-29-10]06:11:40 RICHARD Yeah, as I, I listened to the questions, um, there's, there's conditions out there that we deal with, uh, in the marketplace. I think everybody's hitting the same kind of issues, uh, across the nation, the appraisal issue and how you deal with appraisals that don't come in, uh, at the market values you anticipated even when you have other appraisals that are available or that you've done to substantiate what you thought was the market value.

[WEBINAR 06-29-10]06:12:06 RICHARD (CONTINUED) Um, there's, there's questions about how to, you know—facts stacked upon the what's the appropriate way to use them with special programs and how do you do this. And, and I just have to, you know, as I'm listening and watching I'm thinking, you know, if this was all easy they wouldn't need us and the reason we're here is because this is what we do. This is, is, is for a lot of us, part of our position on earth.

[WEBINAR 06-29-10]06:12:35 RICHARD (CONTINUED) That we work with affordable housing. We work in our communities and we put all of our energy into, to those type of tasks and the goals that come along with being a public servant or community servant. And, uh, there are answers and sometimes it's not the answers we want to hear. But I would say, uh, you know, as we continue to move forward, HUD is listening and they can't always make the changes we want and then, for example, around the appraisal question.

[WEBINAR 06-29-10]06:13:04 RICHARD (CONTINUED) Uh, we're not always going to get to the exact position we would like to be as, as developers of program participants at municipalities. But they do listen and so as you present your question my experience has been—is that, uh, because, uh, partners that we have like our participants do go as far as they can to get you the correct answers and then share that with their counterparts, trying to find solutions because they are also like us, dedicated to solving these problems.

[WEBINAR 06-29-10]06:13:36 RICHARD (CONTINUED) So I appreciate their time and their efforts that they make and, and I can't say how many different people we've worked with at HUD that have, have really gone beyond, uh, what you would expect to help us


accomplish what we need to accomplish in our, our local areas. So, you know, I want to thank our panelists and, uh, thank those of you who asked the questions because it's the asking of the questions to help us get to a conclusion and a solution.

[WEBINAR 06-29-10]06:14:03 RICHARD (CONTINUED) So thank you very much and appreciate the opportunity again to work with HUD on this and hope you found this useful and helpful.

[WEBINAR 06-29-10]06:14:12 KENT Yes, and, uh, thank you to, uh, David Noguera and Doug Linus and Lisa Ellis from HUD and, uh, to you too, Richard, from Enterprise Community Partners and, uh, for all your questions today, you'll land on a, uh, a page that will allow you to give us some quick feedback, a short evaluation form and then we appreciate the feedback you provide. So take care everyone and look forward to seeing you on a future webinar. Bye bye.

FHA Webinar Transcript - HUD Exchange...you can purchase these homes two ways. You can do them with...

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Transcript of FHA Webinar Transcript - HUD Exchange...you can purchase these homes two ways. You can do them with...