OK gang, fasten your seat belts because in case some of you have been living under a rock for the last few months and haven’t heard, as of October 1, Seller Funded Down Payment Assistance is gone!
However, your buyers can still use Down Payment Assistance from the following sources: Family, Friends, Employer, or Church Organization. There is some legislation in the works to bring it back but if that ever happens it probably won’t be until after the new year and I would imagine with some pretty stringent guidelines, so in the meantime it will be interesting to see how “Friends and Family” are defined.
Also if a buyer owns a primary residence, with the intent of purchasing a new home as their primary residence, in order to use rental income or projected rental income on their existing home to qualify for a new home, the buyer must have a minimum of 25% equity in their current property. If not, then the buyer must qualify with both morgage payments. If there is 25% equity, then the property may be subject to an appraisal or field review to verify.
Ready for some good news now…….The increase to 3.5% minimum downpayment has been postponed to January 1, 2009 or until further notice from the Dept. of HUD. So at least for a few more months it will remain at 3% and if the rumor mill is true, various sources say that the Seller Funded Down Payment Assistance should return after the new year.
I know a lot of agents who are advising their clients not to look at “short sale” homes and I can certainly understand their reasoning. I’ve heard the horror stories of clients waiting 5 months to receive an answer from the bank or not being notified that a Notice Of Default has been filed, however in this changing market, short sales are becoming more viable over the multiple offer foreclosure situation. To be able to offer the highest possible level of customer service to your clients, you may want to consider navigating the process with a road map. One of the best advise tips that I’ve seen comes from Debbie Tuttle an agent with Prudential Americana Group who offers;
“12 Questions to Ask The Short Sale Listing Agent”
1. Have you ever closed a short sale before?
2. How do you handle offers? Do you submit them all to the bank, not having your sellers sign (which, in effect, means there is no valid offer and acceptance) and let the bank figure it out? Or do you use multiple offer protocol, notify all agents to submit their highest and best offers, review them with the seller, have the seller accept or counter the best offer and them submit to the bank(s) for acceptance?
3. Have you requested and received the short sale package from the bank, including the hardship letter?
4. And more importantly, has the seller completed the hardship package? Have you confirmed receipt of the package from the bank?
5. What communication, if any, have you had with the bank?
6. Has the bank approved the list price?
7. Have you received any other offers that you are waiting to hear back on from the bank? Has the property been approved for a short sale prior and not closed?
8. Does the loan have PMI (mortgage insurance) which may require another level of approval or a pre-payment penalty?
9. Is there 1 or 2 deeds of trust? Any other liens?
10. What is the name of the bank(s)? Is the loan FHA or VA – again may require additional levels of approval?
11. How long do you estimate that the lender will take to provide an answer to an offer?
12. How far away from foreclosure is the seller? Has a Notice of Default or Notice of Sale been filed?
Receiving the answers to these key questions should help you through the rough waters of short sales and into the smoother sailing escrow process.
