Advanced Mortgage Training

• Presented by:

• Rob Ross – Senior Loan Officer

• Jaime Young – Senior Loan Officer

November 11th 201011:30am – 1:30pm

Contact Information

Rob RossSenior Loan Officer

Potomac Mortgage Group, LLCCell: 703-568-3749

Direct: 571-266-6503E-Fax: 703-935-4455

rross@potomacmortgagegroup.com

www.ApplyWithRobRoss.com

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Seminar Outline

1- Ed Dean – CEO of Potomac Mortgage Group

2- Loan Types – Loan Limits

3- Property ―Flipping‖ Guidelines and Rules

4- FHA

5- 203K: Rehab / Renovation Loans

6- VA Loan

7- Portfolio Loans

8- Appraisal Procedures

9- MI (Mortgage Insurance)

10- Condos

Ed Dean – CEO – Potomac Mortgage

• Potomac Mortgage Group, LLC (PMG), is a direct lender serving the Washington Metropolitan Area. We lend in Virginia, Maryland, and the District of Columbia focusing on all types of residential lending. PMG’s technology platform allows us to process your mortgage locally in an expeditious and efficient manner using automation to reinforce a streamlined, secure process.

• Whether you are a first time homebuyer, purchasing a new home, refinancing, or are in need of a construction loan our experienced loan officers can help! Every client has different needs in today’s ever changing market so it is our goal to provide the most competitive RATES and PROGRAMS you will find.

• Potomac Mortgage Group, LLC was formed by Ed Dean and Fred Brooks to create a new level of employee and client services unparalleled in our industry today! Let us be the “Partner You Can Trust.”

Loans Types Available

• Conventional Conforming

▫ $0 - $417,000 & $417,00 - $729,750

• Jumbo – Above $729,750

• FHA / VA

• Portfolio Loans - See Flyer

Property Flipping 90 Day Rules

Conventional Financing

• Conventional Fannie / Freddie Loans

- Flipping timeframes are from 90 days to 24 months depending on investor and overlays.

- Seller must be on title for 90 days…..meaning your buyers can’t go under contract until the 91st day after the seller goes on title.

- The seller will NOT always go on title the day the deed is recorded. It all depends on how fast the title company records it with the courthouse.

- ADVICE: When acquiring a listing it’s best to check on this upfront so you will know when to properly list and market the property for sale.

- Example: ―Double Contract Offer‖

FHA Flipping • Here are a few highlights from the notice but be sure to review the FHA notice

for a complete list of conditions to obtain the waiver:

• All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the transaction.

• The seller holds title to the property.

• No pattern of previous flipping activity in the past 12 months.

• The property was marketed openly and fairly.

• Max appreciation from acquisition cost is 20%.

• Only forward mortgages, not reverse mortgages are eligible for the waiver.

• Below is a link to a Website with the FHA waiver notice that lists ALL conditions that must be satisfied to get the waiver.

LINK TO 90 DAY RULE COMPLETE WAIVER REQUIREMENTS

http://www.hud.gov/offices/hsg/sfh/currentwaiver.pdf

Changes With FHA Loans Take EffectBy: Rob Ross, Potomac Mortgage Group, LLC

• Major changes with the Federal Housing Administration (FHA) program took effect on October 4th. Listed below are the main changes and what it means for homeowners / buyers looking to obtain an FHA-backed purchase or refinance loan.

• Upfront Mortgage Premiums: This is the amount paid at closing to FHA to insure a loan. Prior to 10/4, FHA loans carried an upfront mortgage insurance premium of 2.25% of the loan amount. (This has dropped to 1.0%) However, since most FHA-backed loan borrowers roll this upfront cost into their loan amount, this impact may not be widely felt with rates being so low.

• Annual Mortgage Premiums: This is the amount one pays each year towards their mortgage insurance (paid monthly). Before 10/4, all loans — regardless of the loan-to-value (LTV) ratio — were charged a mortgage premium of 0.55%. This now rises to 0.85% for loans with an LTV of less than 85 percent.To 0.9% for loans with an LTV that is greater than 95%. This change will be felt by all borrowers due to an increase in monthly payment!

• Minimum Credit Score: Historically FHA has not required a minimum credit score. In the past year things have changed greatly with regards to this. The minimum credit score FHA requires is 580. However, to even reach the point of FHA approval the borrower must find a lender who will accept their credit score. Good Luck! (640)

• NOTE: Per recent analysis by Zillow Mortgage Marketplace, 1/3 of Americans with a credit score of less than 620 where highly unlikely to get even one loan quote. Translation: If a borrower’s credit score is so low that a lender won’t provide financing, it doesn’t matter what the FHA minimum is.

VA Loans

• Appraisals: Ordered through VA approved appraiser list. All lenders nationwide have to use this list. It will take a minimum of 14 days to complete.

• There is an upfront MIP (2.15%) but NO monthly MI

• Best Jumbo VA Loan: $768,750 to 100%

• Max Entitlement VA:

Formula: Sales Price - $768,750 x 75% + $768,750

Example: $1,00,000 - $768,750 = 231,250 x 75% =

173,437 + 768,750 = LOAN AMOUNT = $942,187

203K Rehab Loan by: Jaime Young – The Ross Group (see inserts)

• How does a 203K rehab loan work

• Eligible Repairs & Improvements

• Special Conditions & Terms

• Repairs– Streamline vs. Full

• General contractor requirements

• Disbursement of funds for renovations

Portfolio Loans – See Rate Sheet

• Portfolio loans are mortgages that are held as an investment by the lender. Usually they hold on to the loan because it doesn't fit the underwriting guidelines for investors on the secondary market.

• Many times a portfolio lender will have programs or different guidelines that are not typical of loans that are sold on the secondary market which follow FNMA and FHLMC guidelines. Therefore you may be able to sometimes obtain a certain home loan program that you may not normally be able to obtain due to your certain situation, by going with a lender that offers a portfolio loan.

• While portfolio lenders may be more flexible with their lending guidelines, they can be more conservative on things like: the types of properties they lend on, the Loan to Value (LTV) ratios, the appraisal and review. Since they intend to keep the loan, in the event they have to foreclose they want to make sure that the property will resell, quickly, and for at least what they lent on the property.

• Some portfolio lenders have niches such as offering excellent jumbo loan rates (see attached flyer)

Appraisal Request Procedures

• Once you have a ratified contract we can order the appraisal for the property. We have been able to get complete appraisals sent back in as quick as 10 days in some cases.

• Appraisal are now ordered off a rotating appraisal request list called ―Mercury.‖

• PMG Advantage: We have hand selected the 12 appraisers on our list. The ―big‖ guys have too many to count.

• If an appraiser does not perform in the timeframe requested then we have the right to remove them.

• Average Appraisal Cost:

• $400 Conventional loans

• $450 Rush order in 5 days or less / VA / FHA Loans

• $550 for Conventional Loans $1 Million and over sales price / Investor Loans.

• NOTE: only 1 appraisal required on JUMBO FHA loans

• FHA appraisals are now ordered through ―Mercury.‖

Condos: Types

• Low Rise: Garden Style (4 floors or lower)

• High Rise: 5 Floors and above

• Existing Condo / Re-sale

• New- Construction / Renovation

• What makes a condo warrantable vs. non warrantable?

Condos: Condo Questionnaire

• See Attached example(s) in folder• Q: What is a Condominium Questionnaire?

A: A Condo Questionnaire typically is sent to the condominium HOA on the lender’s letterhead. It contains questions about the number of units in the condominium project, how many of the units have been sold or rented, whether all the common areas have been 100 percent completed, and other questions concerning the condominium projects.

Condos: CPM – Fannie Mae

• Condo Project Manager

Condo Project Manager™, also known as CPM™, is Fannie Mae's Web-based tool that enables lenders to quickly and easily certify a condominium project (or a legal phase of a project) through the CPM Expedited Review process

Condo Project Manager (CPM™) is an easy to use, Web-based system that centralizes and documents condominium project reviews. CPM supports our condo project acceptance guidelines. Instead of interpreting eligibility on a case-by-case basis, you can use CPM's built-in rules to apply the best and most streamlined guidelines to a project.

Only Fannie Mae seller/servicers are eligible to use CPM. Brokers must work with an approved seller/servicer that has registered for CPM

CPM continued….• CPM benefits include:

• Expanded eligibility guidelines provide even greater flexibilities than our revised "1028" guidelines: Using CPM, lenders may receive project certification with lower than standard presale levels.

• Streamlined process: Automated business rules determine if a project is eligible for certification, eliminating manual interpretation of guidelines.

• Lender exclusivity: Project certification is lender-specific so, unlike 1028 acceptance, project certification in CPM does not extend to other lenders.

• Free of charge: CPM does not have any usage or project submission fee.

Condos: Information that we need!

• Condo management association- Name of management company- Contact person and phone number- Legal Name of actual Condo Project

Please provide this information to us when you send a copy of the ratified contract.

Mortgage Insurance (MI)

Less than 20% down payment

• Top 5 MI Companies: MGIC, PMI, RMIC, Genworth, Radian

• MI companies are still requiring that they approve a full loan file for monthly MI.

• Meaning…. we must obtain a full loan application from a buyer, with all supporting documents, and fully approve through our underwriting before sending the file to the MI company. (Including Appraisal)

• Even if our underwriter approves the loan, the MI company can deny the file for MI coverage.

• There is a 72 hr turn around time to approve the MI. If they deny it for any reason they will not continue underwriting the file until that condition has been met.

Mortgage Insurance: Top Programs & Tips

• Monthly MI Payment: This is paid monthly until your loan hits 80% LTV.- Above 80% to 90% on Single Family & Town Homes & Condos to $729,7500 - 95%% on Single Family & Town Homes & Condos to $417,000

• LPMI: Lender Paid Mortgage : LPMI benefits borrowers by eliminating MI closing costs and monthly MI premiums and also provides these additional benefits:

• Lower down payment needed – frees up cash for other things• Possibility of qualifying for a larger loan without increasing monthly payments• MI premium may be tax-deductible

- The cost is built into the rate - Above 80% to 90% on Single Family & Town Homes & Condos to $729,7500 - 95%% on Single Family & Town Homes & Condos to $417,000

• Split Premium MI: is a payment option that features lower monthly MI rates combined with an upfront premium due at closing.

Max DTI Ratio: 41% (45%) / 2 months reserves / Fixed Rate or ARMS / NO Int. OnlySecond Homes: 90% to $417,000 LA (Single Family / Town / Condo) 720+ FICOCondos: Total Owner Occupancy Ratio MUST BE 70% of project

info@dominiontitle.com

(703)757-9500 (voice)

(703)757-9359 (fax)

1144C Walker Road

Great Falls, Virginia 22066

Paul M. Sawtell, President/Title Officer

Connie Sawtell, Vice President

Thanks for your time! Any Questions?