FHA TRAINING

1. FHA TRAINING Offered by… First Mortgage Corporation Desktop Underwriter is a registered trademark of Fannie Mae. Loan Prospector is a registered trademark of Freddie Mac. This presentation is a summary and is not complete. This information is for mortgage professionals only and should not be distributed to or used by consumers or other third-parties. Information is accurate as of the date shown below and is subject to change without notice. 3/17/2013

2. Today’s Agenda • Introduction • Eligibility Guidelines • Program Highlights • Underwriting Guidelines • FMC Overlays • Interest Rates, Fees, Closing Costs • FHA Upcoming Changes… • FMC Support

3. Introduction to FHA • Who is Federal Housing Administration? • The Federal Housing Administration generally known as “FHA” was established in 1934 as a division of the U.S. Department of Housing and Urban Development. • They provide mortgage insurance on loans made by FHA-approved lenders throughout the US and its territories. • It is the largest insurer of mortgages in the world insuring over 34 million properties since its inception . • FHA’s mission is to expand and increase national homeownership opportunities. • Eligible FHA Programs • Section 203(b) – Standard FHA Program: MI for One to Four Family Homes Program • Section 234(c) – Subsection of 203(b): Condominium Housing Program • Section 251 – Subsection of 203(b): Adjustable Rate Mortgage Program (ARM) • What is FHA Mortgage Insurance? • FHA MI protects lenders against loss if homeowner defaults on loan. • The lender bears less risk because FHA will pay the lender should a homeowner defaults on their loan. • The cost of the insurance is passed along to the borrower and is typically included in the monthly payment. • How is FHA funded? • FHA operates from self-generated income and costs the taxpayers nothing. • The proceeds from the MI paid by the homeowners is used to operate the program entirely.

9. Maximum LTV/CLTV

10. FHA Standard Conforming FHA JumboFHA ARMSFHA 203k – SUSPENDEDFHA Streamline – See separate training FHA PROGRAMS FIRST MORTGAGE

11. Standard FHA Program Highlights

12. FHA Jumbo Program Highlights

13. FHA ARM Program Highlights

15. GENERAL INFORMATION • Underwriting Methods • General Underwriting Guidelines FIRST MORTGAGE

16. Automated Underwriting

17. UW: Ratios

18. UW: Compensating Factors

19. UW: Reserves

20. Underwriting cont’d…

21. Underwriting cont’d…

22. Credit GuidelinesNon-Traditional Credit vs. Insufficient CreditBankruptcies & ForeclosuresCollections & JudgmentsDisputed AccountsShort Sales & Short Pay Offs90-Day Flip Waiver CREDIT FIRST MORTGAGE

24. UW: Non-Traditional vs. Insufficient

25. Alternative Credit References

26. Non-Traditional Credit Borrowers

27. Evaluating Credit for NTB & ISB

28. UW: Bankruptcy & Foreclosures

29. UW: Short Sales & Short Payoffs

30. UW: Collections & Judgments

31. UW: Disputed Accounts

32. UW: 90-day Flip Waiver

33. Underwriting cont’d…

34. Income Guidelines INCOME FIRST MORTGAGE

35. UW: Income

36. UW: Income cont’d…

37. UW: Income cont’d…

38. UW: Income cont’d…

39. Eligible PropertiesAppraisal GuidelinesCondo Approval Guidelines PROPERTY GUIDELINES FIRST MORTGAGE

47. FMC Overlays on top of FHA guidelines 1) Manually Underwritten loans 2) Fico scores Less than 620 WITH DU approvalOverlay Matrix FMC OVERLAYS FIRST MORTGAGE

48. Changes to FHA Mortgage Insurance PremiumsJoin our FHA MIP Training on 3/19/13 for upcoming changes… MORTGAGE INSURANCE FIRST MORTGAGE

49. Mortgage Insurance

50. MI: Sample