This Renovation financing program. Any qualified

customer who plans to purchase or refinance a primary residence, second

home, vacation home or an investment property to make renovations is eligible.

Here are some examples and scenarios that demonstrate how buyers, industry

professionals, investors and community organizations can benefit from

accessing, recommending or utilizing a renovation loan:

• Buy less-than-perfect homes in great locations and turn them into

dream homes

• Eliminate property problems sooner rather than later

• Expand a house to meet their needs

• Enhance the equity in their current home by making valuable changes

• Upgrade, add on and remodel without tapping into their savings

• Consolidate debt while improving their home with a cash-out refinance

• Move hard-to-sell listings

• List hard-to-sell properties knowing that renovation financing is available

• Offer solutions that generate listing and selling commissions

• Make potential buyers envision ways to remodel a property to make it fit

their needs

• Offer realistic and cost-effective estimates for property improvements

knowing that the financing is in place

• Feel confident that they will receive payment for work completed in a

timely manner

• Purchase with low down payments, borrowing up to 90% of the purchase

plus renovation costs in one loan

• Refer clients and members to a renovation specialist to help facilitate the

acquisition and restoration of historic properties

• Provide a financing outlet for reunification of properties

• Impact an entire neighborhood by utilizing renovation loans to save

structures or just improve them

• Offer solutions to homebuyers for properties needing significant repairs

• Direct citizens with property defects to a renovation specialist

• Blend energy efficient mortgages to help citizens lower the cost of utilities and

make it easier to maintain their home

• Use renovation financing to help eliminate blighted housing in neighborhoods

Applicants must meet standard credit qualification guidelines applicable to the loan program. The property must also meet the qualification criteria for the renovation program. The after-completed appraised value must support the value and new mortgage amount. Down payments and closing costs may vary depending on the loan type for which the applicant qualifies. Cash may come

from personal savings, gifts or approved grants and loans.

Depending upon the program selected, most owner-occupied and non-owner-occupied 1-4 family and mixed-use properties (in some cases) are eligible for renovation financing. These include condos and manufactured housing. The number of units on the site must meet the

provisions of local zoning requirements. All newly constructed units must be attached to an existing dwelling.

• Moving a house from one site to another

• Completing unfinished newly constructed properties

Almost any kind of repair or improvement can be financed as part of a renovation loan. Here are some examples:

• Structural improvements/changes/additions

• Changes for improved functions such as remodeling kitchens and baths

• Elimination of health and safety hazards such as lead-based paint and

mold abatement

• Changes for aesthetic appeal and elimination of obsolescence such as

new siding, painting, landscaping

• General replacement of electrical, HVAC, plumbing, installation of well

and/or septic tanks

• Roof raisers

• Completely rebuilding a home on modified existing foundation

• Installing improvements for disabled access

• Installing or repairing swimming pools

• Adding a garage

• Finishing a basement

• Adding sun rooms, hot tubs, decks

All work can begin after closing and must be completed within six months from

that date.*

A primary component in the renovation process is the property. For homebuyers planning to buy a new property, renovation financing can actually expand their opportunities. Buyers may find that they are able to choose a house they never considered because they can now allow for the renovation costs when they purchase it.

For homeowners who are eager to improve their property, accessing renovation

financing can put them closer to turning their plans into reality.

Once customers have either secured a property or determined that they are going to make improvements to an existing property, they will want to contact a  Home Mortgage renovation specialist. He/she will tell customers everything they need to do and what documentation they need to supply in order to get loan approval quickly.

At this time, a renovation specialist can also help customers determine if they should enlist the services of a HUD-approved consultant, home inspector or contractor for assistance in assessing renovation needs, getting a rough estimate of the costs and estimating the value of the property after the improvements.

This is called a feasibility study and it is optional. If the feasibility study is done, it will be prior to any inspections (termite, well and septic) or the completion of a work write-up.

The next step in the process is to have any applicable inspection performed.

If a customer decides not to have a feasibility study done, the renovation specialist will provide him/her with the names of approved consultants who are neither employees of HUD nor your Home Mortgage, but independent contractors and renovation experts. The consultant will inspect the property, assist and advise the customer to determine the needed improvements and the

cost estimates for those repairs/improvements. The consultant will ensure that a customer is making all necessary renovations and the desired improvements and will then itemize them, list who needs to make them and what they will cost in a document called a work write-up.

Customers securing renovation financing should:

• Provide their renovation specialist with a copy of a fully executed sales contract

• Meet with the renovation specialist and submit all necessary documentation and fees (appraisal, credit report) at time of application

• Order a termite inspection (if called for by the Renovation Program) and then submit it, upon completion, to Wells Fargo Home Mortgage

• Schedule an appointment with an assigned approved consultant. Meet the consultant at the property to discuss all determined repairs/improvements

• Pay the consultant directly for services at the time of the initial inspection

• Meet with the selected contractor to agree on work outlined in the work write-up

• If applicable, obtain copies of the contractor’s license or proof of contractor by trade, insurance and other necessary forms that will be provided by the renovation specialist

• Then, submit all contractor documentation to the renovation specialist

• Once the loan is approved, review the commitment letter for conditions and provide all satisfactory documentation (conditions) in a timely manner

• Contact a closing agent to schedule closing once conditions have all been met

• After closing, contact the consultant each time a draw

inspection is needed

The work write-up is a detailed scope of work that includes the necessary materials and a cost breakdown. It defines what is required to renovate the property to meet the customer’s needs and

program guidelines. This document also ensures that all health and safety issues have been addressed and, most importantly, that the allocated funds for the project are sufficient to cover the required work for project completion. Most importantly, it provides an opportunity for the parties – customer, contractor, appraiser, lender and consultant – to understand

and agree on the scope of work.

A renovation sales contract is very similar to a traditional purchase agreement. A renovation specialist will assist customers with the specifics and the required language for completion of the contract.

One of the most important steps in the renovation process is for the customer to select a contractor. It is advisable to get recommendations and price quotes from several reputable contractors. In most states, the contractor selected must be licensed and insured.

The selected contractor will also need to be made aware of the project scope and the program guidelines. A renovation specialist can help explain the process and provide the customer with the required documents that the customer and the contractor will need to complete throughout the project.

Prior to meeting with the consultant, the customer should make a list of all desired improvements. In addition, the consultant must also be provided with copies of all inspections (termite, well and septic, if applicable) to determine if any other work will be added to the report. If there are any identified structural, health or safety issues, they must also be added to the report. The

contents of the report are itemized by category (35 total) and then summarized for a total cost. Based on this report, the consultant will recommend the number of inspections to be performed during the renovation process and will factor in a percentage for a contingency reserve to be used in case of unforeseen

deficiencies.

There are instances when someone other than the consultant prepares the work write-up. When this is the case, the consultant will act as a plan reviewer to inspect the property, make any necessary changes to the scope of work and sign off on the plan. The same consultant may also make draw inspections during the project.

Upon completion of the work write-up, the customer and the renovation specialist will receive a copy. Both will review it and it will then be sent to an appraiser who uses it to determine the after-improvement value of the property.

The completed work write-up, contractor documents and appraisal are submitted by the renovation specialist for final property approval. Once the approval process is complete and any outstanding conditions are met, the loan can proceed to closing.

Depending on the state in which the property is located, a title company, escrow agent or real estate attorney is responsible for handling the settlement. It is a good idea to select this closing agent early in the process to allow enough time to research title, order a survey and correct any errors.

When the loan is approved, a settlement date, time and location can be scheduled. The settlement agent will coordinate the closing with your Home Mortgage. Before closing, the renovation specialist must be provided with a prepaid homeowners insurance policy and proof of fulfillment of all underwriting conditions.

The closing agent will have all appropriate documentation executed at settlement and will prepare a HUD settlement statement that details all costs of the transaction. A renovation escrow account will be established to hold the funds for the project. The fund disbursements are managed by the your Home Mortgage National Draw Center. Upon receipt of the customer’s file, a draw specialist is assigned to the customer and will him/her a Welcome Package containing instructions for processing the draws smoothly. The renovation specialist will also provide the customer with the name and number of the draw specialist.

The customer’s loan will be fully funded at closing. For purchase transactions, the sellers receive their net proceeds, real estate agents are paid, and the renovation escrow account is established to cover the renovation costs. For refinance transactions, the homeowner’s existing mortgage loan is paid in full and the renovation funds are placed in an escrow account. Funds are released from the escrow account only when work is completed. In cases where permits are required, proof of the permit(s) is required prior to the release of funds. The customer contacts the consultant to set an appointment for each inspection. The consultant inspects the completed work and executes a draw request that must be signed by the customer, contractor and the consultant in order for funds to be released. This ensures that all involved parties have inspected the work and that everyone has agreed on the payment. The draw request form is then submitted to the  Home Mortgage National Draw Center where a draw specialist issues payment within 72 hours. It can be delivered overnight by check or wired to a specified account. Checks will be made payable to both the customer and the contractor. Funds are disbursed with the condition that all work must be started within 30 days of closing, cannot stop for a period of more

than 30 days and must be completed within six months.*

When all work is complete, the draw specialist provides the customer with a letter of completion. The customer signs and returns this letter prior to release of the final funds. Then, the customer receives a final release form showing all the work is completed and how all funds were applied.

For certain transactions, the appraiser may be required to re-inspect the property and issue a completion certificate to  Home Mortgage.

the person who meets with the customer, inspects the property, and prepares a report detailing the necessary and desired work to be performed on the

subject property.

completed prior to the appraisal being ordered.The appraiser can then

establish the after-completed value based on the work that will be performed

on the subject property.

Sections in the Work Write-Up include:

• Narrative scope of the work to be done

• Architectural plans or exhibits

• Details of permits required

• The Specification of Repairs

• Draw request

• Contingency Reserve recommendation

• Number of Inspections Needed

This dollar amount will be recommended by the consultant and included on

the work write-up.These funds can also be financed into the loan, or provided

by the customer.

customer and the contractor upon completion of work at a specific time in the

project. Percentage payments can be made for work that is partially completed.

The customer, the contractor, and the consultant must all sign off on the draw

request, thereby agreeing that the payment is being released based on the

satisfactory completion of the work.These draw releases happen periodically

realign some of the funds within the scope of work. At this time, the consultant will discuss the necessary changes with the customer and the contractor and then submit a change order to the lender.This must be submitted and approved by the lender before any changes are actually performed.*

all funds released. This 10% is held back until the project is complete.This will be repeated throughout the renovation period until all work is completed and the final inspection is performed. At this time, after all parties agree that the work has been completed satisfactorily and there are no liens that have been filed against the property, all holdbacks will be released.

inspection performed by the appraiser and/or consultant to ensure all the work originally proposed has been completed.

that no liens have been placed against the subject property during the renovation process.

allows for the administration of escrow. Included in this fee is the management of disbursement funds, ordering the completion certificate, and assisting in the resolution of any contractor and/or homeowner issues.This fee can be financed.