Introduction

1. Welcome Introduction Chicago Association of Realtors Discovering Government Selling Opportunities: Learning and Growing Together

2. FHA Applications by the Numbers • 2007 2,411$362 million • 2008 (YTD 10/19/08)5,491 $932 million 2008 Chicago Region Pipeline at 43% by unit and 33% by $ volume * Data Provided by Countrywide’s Internal Reporting System - Turquoise

3. Introduction Why FHA is so important in 2008. • Secondary market conditions have caused a worsening of pricing/rates on many conventional loans • The percentage of transactions closed with FHA financing has tripled in last 12 months1 • Some estimates for the 2008 real estate market, predict FHA financing to be involved with more than 40% of all mortgage financing2 • There is a large percentage of buyers left behind by mortgage guideline contraction who are still "financeable" under FHA Bottom Line • You can sell more homes than you think, simply by working with an FHA expert. 1. Source: Peter G. Miller, “November Originations Up, Up, & Away Says HUD”, (December 13, 2007) 2. Source: Peter G. Miller, “Not The Whole Story”, (December 28, 2007)

4. Scenario Go the Distance! After you have laid all of the groundwork and progressed with your customers to the point of showing them houses, you take them on a tour of three houses. Despite your best efforts, none of them are right for them. There's a fourth home you could show them in another town, but you don't because you're unfamiliar with that area. Later, you find out that another realtor showed them that 4th house and closes them at a full 6% commission rate. All of your money was in that 4th House!! How would you feel?

5. Scenario Go the Distance! Moral of the story: Do not let another Realtor take your money. Now is the time to brush up your knowledge and work with an expert in the “FHA Neighborhood”.

6. Overview Overview FHA Advantages – An Overview • No minimum credit scores required • Eligible for financing despite challenged credit • Borrower’s entire cash investment can be gifted by family members, employers, or other approved sources such as a county or state bond program. • Seller concessions allowed up to 6% on all LTVs • No reserves required on all 1-2 unit properties

7. Overview Overview FHA Advantages – An Overview • There is no maximum cap on income or debt ratios with FHA. Compensating factors are always considered. • Non-Occupant co-signers can be used to qualify for FHA loans • Standard FHA loan amounts not impacted by soft market conditions • Assumable loans • Low down payment options on owner occupied properties including 2-4 unit building.

8. FHA Loans. Timeless and timely. Conventional FHA Example: Sales Price: Loan Amount: Interest Rate: Term: Down Payment: Est Closing Costs: Est Prepaid Expenses: Total Estimated Cash to Close: Est. Monthly P&I: Est. Monthly Tax & Insurance: Est. Monthly Mortgage Insurance: Est. Total Monthly Housing Expense: $424,800 $403,560 6.5 360 $21,240 $1,580 $5,686 $28,506 $2,550.77 $500.00 $403.56 $3,454.33 $350,000 $345,975 6.875 360 $14,868 $1,500 $5,686 $22,054 $2,636.39 $500.00 $173.79 $3,310.18

9. Overview FHA – What’s New? Recent changes make FHA loans even more competitive in today’s complex environment. • Industry appraisal standards (Fannie Mae appraisal forms) with no additional documentation. • No valuation condition form or Homebuyer Summary. • Eliminated the requirement to make most minor repairs. • Homebuyer and seller, individually or jointly can pay closing costs as agreed to in a sales contract. (FHA no longer limits what closing costs the homebuyer is permitted to pay). • Seller-funded DPA is no longer permitted. • Streamlined approach to financing Condos

10. Summary By taking advantage of our products and value-added services, you can: • Identify your customers’ needs • Offer the best possible customer service • Ensure a smooth transition from “For Sale” to “Sold” • Maximize opportunities and commissions • Capture repeat business