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Presentation by:

Ashley Brint

Patrick Axford

Date: August 22, 2012

©2012 Regions Bank. Member FDIC.

Regions is a registered service mark of Regions Asset Company and is used under license.

FHA Financing - All You Need to Know

2 Hour Continuing Education Course

Topics of Discussion

Introduction to FHA

Borrower Eligibility

Homebuyer Loan Process

Loan Limitations

Property Eligibility

Borrower Qualification

Helpful Resources

(2)

Introduction to FHA Lending

7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622

www.RegionsMortgage.com

2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008

www.RegionsMortgage.com

(3)

Historical Information

FHA was created by Congress

in 1934

Provides Mortgage Insurance

Currently no cost to taxpayers

7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622

www.RegionsMortgage.com

2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008

www.RegionsMortgage.com

FHA Lending is Exploding

Now represents >30% of home loans

Geared for:

First time buyers

Borrowers with little to no money

Buyers with less than perfect credit

(4)

FHA Loan Programs

Single Family Home

- Standard FHA 203(b) loan.

203K - FHA major home improvement, rehab loan.

Cash-Out Refinance Loans - Up to 85% of properties

value cash-out refinance.

HUD Homes - Properties for Sale and Financed by FHA

FHA adjustable rate mortgages (ARM) - Standard

FHA ARM, Adjustable Rate Mortgage

FHA Buydown Loans - FHA 1/1 or 2/1 buy down loan.

Reverse Mortgages - HUD reverse mortgage for

seniors over 62

7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622

www.RegionsMortgage.com

2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008

www.RegionsMortgage.com

FHA Guidelines

Eligible Borrowers

7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622

www.RegionsMortgage.com

2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008

(5)

Who is Eligible?

Individuals Only

Permanent Resident Aliens permitted.

Non-Permanent Resident Aliens permitted with proper

ID. (Be able to prove who you are)

Borrower(s) must have a valid SSN.

There is no maximum age limit requirement, but the

minimum age is 18.

7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622

www.RegionsMortgage.com

2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008

www.RegionsMortgage.com

Occupancy

Primary Residence Only

Occupying Co-Borrowers:

The co-borrower will be qualified the same as the primary

borrower.

The co-borrower cannot be a person who is a third party to

the purchase transaction: seller, realtor, builder, or appraiser.

Non-occupant Co-Borrowers:

Maximum financing is permitted when borrowers are related

by blood, marriage or law.

(6)

Maximum FHA Insured Properties

A borrower cannot own more than one

HUD-insured property

unless

:

Relocation

Increase in family size

Splitting jointly-owned property

Non-occupying co-borrower

7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622

www.RegionsMortgage.com

2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008

www.RegionsMortgage.com

Criteria for Quoting Rates:

Loan Size

LTV

CLTV

Credit Score

Credit History

Escrow

Preference

Closing Date

Loan Type

Property Type

Occupancy

Type

Residency

Available Assets

Seasoning

Asset

Co-borrowers

Debt Ratio

Housing Ratio

Improvements

Needed

Employment

Type

Documentation

Available

Relocation

Seller

Contributions

Cash-out

7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622

www.RegionsMortgage.com

2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008

(7)

Homebuyer Loan Process

7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622

www.RegionsMortgage.com

2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008

www.RegionsMortgage.com

What is a Pre-Qualification & Pre-Approval

Pre-Qualification: Credit report only - “Non

Verified” information from the borrower.

Pre-Approval: Credit approval - income &

asset documents are verified & reviewed by

underwriter.

Average Closing Turn Time – 30 days without

(8)

Required Documents for Pre-Approval

Pay stubs (1 month)

Tax returns & W-2 forms (2 years)

Two most recent bank statements

Copy of valid driver’s license

Two year history of residence for all borrowers

Name, address and telephone number of all landlords (past 2

years)

Employer’s name and address (last 2 years)

Pension and/or Social Security Awards Letter (if retired or

receiving other non-earned income)

7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622

www.RegionsMortgage.com

2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008

www.RegionsMortgage.com

FHA Homebuyer Loan Process

Who Does What???

Mortgage Loan Originator

Assists you in completing the loan application

Discusses qualifying, monthly payments and cash needed for closing

Explains various loan programs available and quotes interest rates

Communicates documentation requirements

Answers any questions you may have throughout the process

Attends closing whenever possible

Processor

Communicates with you on items necessary for your loan closing

Pre-underwrites and prepares loan for approval

Works with all parties involved with the loan process

7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622

www.RegionsMortgage.com

2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008

(9)

FHA Homebuyer Loan Process

Who Does What???

Continued…

Underwriter

Renders final decision on your loan

Works directly with Loan Originator and Processor to approve your loan

Closer

Sets or verifies closing date after loan has been approved

Assembles package for your closing day

Sends package to the title company

7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622

www.RegionsMortgage.com

2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008

www.RegionsMortgage.com

(10)

Maximum Mortgage Amount

Max Loan Amount = $271,050

3.5% required down payment

Down payment can come from

gift of family member (funds not

required to come from borrower)

Down Payment Assistance

allowed

Seller contributions up to 6%

towards closing & pre-paids costs

7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622

www.RegionsMortgage.com

2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008

www.RegionsMortgage.com

Gift Funds

Who May Provide a Gift

Family member

Borrower’s employer or labor union

Charitable organization

Non-profit agency that has a program providing home

ownership assistance to low- and moderate-income families,

or first-time homebuyers.

Who May Not Provide a Gift

The donor may

not

be a person or entity with an interest in

the sale of the property, such as seller, realtor or builder.

7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622

www.RegionsMortgage.com

2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008

(11)

Mortgage Insurance Requirements

What is Mortgage Insurance:

Mortgage insurance is a policy that protects lenders

against losses that result from defaults on home

mortgages. FHA loans have two tiers of mortgage

insurance (annual & up-front).

Upfront MIP - can be added to closing costs, or

borrowers can finance it by adding it to the loan

amount.

Annual MIP - is paid monthly.

7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622

www.RegionsMortgage.com

2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008

www.RegionsMortgage.com

Mortgage Insurance Requirements

Annual Premium

Upfront Premium

(30 Years)

≤ 95%

> 95%

1.20%

1.25%

1.75%

(15 Years)

≤ 90%

> 90%

.35%

.60%

1.75%

(12)

How does an FHA loan compare to a

Conventional loan with mortgage insurance?

7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-862-3407

www.RegionsMortgage.com

2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-862-3407

www.RegionsMortgage.com

Payment Comparison

30 YR FRM/$100,000

Loan Amount/95% LTV

Conventional FRM

FHA FRM

Estimated Rate

4.00%

4.00%

Est. Up Front Mortgage

Insurance

NA

$1,750.00

Est. Monthly Mortgage

Insurance

$79.35

$103.33

Estimated P&I

$477.42

$485.78

Est. Monthly Principal

Payment with MI

$556.77

$589.11

Property Eligibility

7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622

www.RegionsMortgage.com

2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008

(13)

Eligibility Properties

Property

Types:

Single Family Detached & Attached

2-4 Unit Properties

Modular Homes

HUD-Approved Warrantable

Condominiums & PUDs

Leaseholds (with restrictions)

New Construction

7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622

www.RegionsMortgage.com

2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008

www.RegionsMortgage.com

FHA Appraisal Requirements

FHA approved appraiser.

Property must be secure, safe &

structurally sound.

Case number required.

Appraisal can be no older than 120 days

(14)

Your Listing As Seen by

You…..

How

you

see your

new listing.

7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622

www.RegionsMortgage.com

2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008

www.RegionsMortgage.com

Your Listing As Seen by the homebuyer….

How the

homebuyer

sees your

new listing.

7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622

www.RegionsMortgage.com

2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008

(15)

Your Listing As Seen by the lender…..

How the

lender

sees your

new listing.

7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622

www.RegionsMortgage.com

2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008

www.RegionsMortgage.com

Your Listing As Seen by the appraiser…..

(16)

Your Listing As Seen by the Tax Assessor!!

How the

tax assessor

sees your

new listing.

7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622

www.RegionsMortgage.com

2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008

www.RegionsMortgage.com

Sales Contract Guidelines

Required Forms:

Amendatory Clause

FHA Real Estate Certification

Omit allowances from Sales Contract.

Allowances would include moving expenses, decorating

allowance, personal property, etc.

Could cause additional cash out of pocket

Dollar-for-dollar reduction in the sales price means the

borrower must qualify with more liquid assets

7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622

www.RegionsMortgage.com

2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008

(17)

FHA Amendatory Clause

(18)

Borrower Qualification

7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622

www.RegionsMortgage.com

2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008

www.RegionsMortgage.com

Credit Guidelines

Minimum Credit Score – 580

Three repository merged credit report or (RMCR)

with at least two FICO scores

Non Traditional Credit is acceptable if borrower has

no credit score

A credit report is required for a non-borrowing

spouse if community property state

Credit documents expire 90 days from loan

approval.

7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622

www.RegionsMortgage.com

2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008

(19)

Credit Guidelines

Borrowers in active Chapter 13 allowed

one year of the pay-out period under the bankruptcy has

elapsed

the borrower's payment performance has been

satisfactory

the borrower has received written permission from

bankruptcy trustee.

2 years from discharge date for Chapter 7

3 years from short sale or foreclosure

Court-ordered judgments must be paid off in full.

7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622

www.RegionsMortgage.com

2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008 www.RegionsMortgage.com

Credit Scoring

35%

35% Payment History

30% Amounts Owed

15% Length of Credit History

10% New Credit

10%

10%

15%

30%

(20)

Credit Tips

Keep balances low on credit cards.

Pay off debt rather than moving it around.

Don’t close unused credit cards as a

short-term strategy to raise your score.

Don’t open a number of new credit cards

just to increase your available credit.

If you have been managing credit for a

short time, don’t open several new accounts

too rapidly.

New accounts will lower your average account age, which will

have a larger effect on your score if you don’t have a lot of

other credit information.

7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622

www.RegionsMortgage.com

2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008

www.RegionsMortgage.com

Checking Your Credit Score

Under federal law, you have the right to obtain a free

copy of your credit report from each of the consumer

reporting agencies (Equifax, Experian and Trans Union)

once a year.

To order your free credit report:

By telephone: (877) 322-8228

On the web: www.annualcreditreport.com

Credit Bureau Phone #’s:

Equifax (800) 997-2493 or www. Equifax.com

Experian (888) 397-3742 or www.experian.com

Trans Union (800) 916-8800 or www.tuc.com

7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622

www.RegionsMortgage.com

2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008

(21)

Credit Solutions

Solutions for Low Score:

Equifax CreditXpert

Assists borrowers in

maximizing credit scores

Analyzes credit and cash

available

Issues customized feedback

Provides approximate credit

score increase

7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622

www.RegionsMortgage.com

2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008

www.RegionsMortgage.com

Credit Debt Monitoring

(22)

Employment History

Employment History - FHA does not require a

minimum length of employment. However, the

lender must verify the borrower's employment for

the most recent two full years, and the borrower

must:

explain any gaps in employment that span one

or more months, and

indicate if he/she was in school or the military

during the most recent two full years, providing

evidence supporting this claim, such as college

transcripts or discharge papers.

7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622

www.RegionsMortgage.com

2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008

www.RegionsMortgage.com

Income Guidelines

Self Employed - 25% or greater ownership interest in a business.

Must have at least two years of employment in the line of work in which

he/she is self employed.

Projected Income for a New Job - scheduled to start a new job within 60

days of loan closing.

Overtime, Commission or Bonus Income - An average of the most recent 2

years (per W-2’s) and current YTD gross income must be averaged. The income

amount to be used must be the lesser of current YTD or the 2-year average.

Part Time Income From a 2nd Job - A 2nd job may be used for income if the

Borrower shows a 2-year (or more) history of holding down the extra job. An

average over the 2 years plus YTD gross must be used to qualify.

VA or Social Security Income - The government agency providing the income

must provide written verification of the payment. Proof of a 3-year continuance

must be documented.

7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622

www.RegionsMortgage.com

2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008

(23)

How much can you afford?

Front end ratio = can’t exceed 31%

Total debt ratio = can’t exceed 43%

Debt payments include:

•Minimum payments on credit cards

•Car payments

•Student loans

•Installment loans

Debt payment do not include:

•Utilities

•Insurance

•Child care

•Rent (if not renting anymore)

7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622

www.RegionsMortgage.com

2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008

www.RegionsMortgage.com

Qualifying Debt to Income Ratio

Total amount of new

house payment:

$750

Total amount of

monthly recurring debt:

$400

Total amount of

monthly debt:

$1,150

Borrower's gross

monthly income

$2,850

Divide total monthly

debt by gross monthly

income:

$1,150/$2,850

Total amount of new

house payment:

$750

Total Gross Monthly

Income

$ 2,850

Divide total house

payment by gross

monthly income:

$750/$2,850

Debt to income ratio:

26.32%

The front end maximum ratio

(24)

U.S. Department of Housing and Urban Development (HUD)

202-708-1112 or www.hud.gov

HUD Hotline 1-800-697-6967

HUD’s Office of RESPA

202-708-0502 or www.hud.gov/respa

HUD Housing Counselors

1-800-569-42877

www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm

Buying a HUD Home

www.hud.gov/offices/hsg/sfh/reo/reobuyfaq.cfm

FHA Resource Center

1-800-CALL FHA (800-225-5342)

www.hud.gov/offices/hsg/sfh/fharesourcectr.cfm

Helpful Resources

7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622

www.RegionsMortgage.com

2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008

www.RegionsMortgage.com

HUD Approved Housing Counseling

Agencies in Shreveport-Bossier City, LA

7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-862-3407

www.RegionsMortgage.com

2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-862-3407

www.RegionsMortgage.com

Agency Name

Contact Info.

MONEY MANAGEMENT INTERNATIONAL

8575 Business Park Dr

Shreveport, Louisiana 71105

Phone: 866-232-9080

E-mail:

counselinginfo@moneymanagement.org

Website:

www.moneymanagement.org

VOLUNTEERS OF AMERICA

520 Olive St. Ste. B-200

Shreveport, Louisiana 71104

Phone: 318-221-8404

E-mail:

bbyrd@voanorthla.org

Website:

https://voanorthla.org

CADDO COMMUNITY ACTION AGENCY

4055 Saint Vincent Ave

Shreveport, Louisiana 71108

Phone: 318-861-4808

E-mail:

matti@shreve.net

LEGAL SERVICES OF NORTH LA

720 Travis Street

Shreveport, Louisiana 71101

(25)

Questions??

If you would like

additional information, please call one of our

Mortgage Loan Officers:

Ashley Brint – 318.795.2621 Ashley.Brint@regions.com

Patrick Axford – 318.795.2623 Patrick.Axford@regions.com

Denice Prothro – 318.795.2624 Denice.Prothro@regions.com

Cathy Galjour – 318.795.2626 Cathy.Galjour@regions.com

Colin Webb – 318.741.8008 Colin.Webb@regions.com

7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622

www.RegionsMortgage.com

2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008

www.RegionsMortgage.com

(26)

Notes Page

7225 FERN AVENUE, SUITE 900 SHREVEPORT, LA 71105 318-795-2622

www.RegionsMortgage.com

2948 EAST TEXAS STREET BOSSIER CITY, LA 71111 318-741-8008

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