The Neighborhood Gold Program:
Neighborhood Gold's program provides a unique opportunity to buyers, sellers, agents and lenders. Let
us deal with what it is and what it is not and how it makes sense to implement into a transaction.
What It Is Not:
Not affiliated with any government agency.
Not for buyers who have the cash and are willing to put down 20% or more
Not for sellers who are unwilling to take less then the appraised value of their home.
Not for
agents or lenders
who are unwilling to use creative financing.
Not affiliated with any government
agency.
Not for buyers who have the cash and are willing
to put down 20% or more.
Not for sellers who are unwilling to take
less then the appraised value of their home, and
are not affiliated with any government agency.
What It Is:
A program that can be used with FHA, Conventional and Sub-prime loans.
There are over 2,500 lenders nationally
that accept this program.
This
is a non-repayable gift to the buyer without
an obligation to pay back.
Down Payment Assistance (DPA) that is provided by a non-profit
organization to help all parties involved in the transaction.
Provides buyer with alternative for more favorable
financing when used.
A strong marketing tool to attract more buyers to a property for sellers.
How Does It Work:
This
program is very simple. The best way to understand how it works is that the buyer is given immediate equity in the property
that is being purchased.
This is provided to the buyer
with a grant / gift which is used for down payment, and/or closing costs. The grant / gift comes directly from a nonprofit
organization, The Buyers Fund, Inc., who has an on-going
pool of funds to consummate thousands of these transactions monthly.
These ongoing sources of funds are replenished at the close of escrow where the seller donates a portion of
his equity in their property from the proceeds of the sale just like a agent and the seller pays all other parties. Let us
look at the example a little closer: .
Example
of How This Program Can Work for You.
The
Qualifications:
Their are (4) four things that are necessary:
- The
buyer must qualify for a mortgage,
- The
property must appraise for the sales price,
- The seller must be willing to participate by donating a portion of his equity to a nonprofit organization,
The Buyer's Fund, Inc.
- The
agent / lender must have received the proper training in order to assist in helping their clients achieve their goals.
There are no credit score minimums, income limits, liens placed on the property, first time buyer
requirements, length of time to live in the property, or geographical restrictions placed on the buyer to qualify for a grant.
The grant funds can be used for owner occupied or non-owner occupied properties.
Necessary Steps in the Transaction:
1. A Purchase Agreement is made up where the sales price of the property is $521,250.00.
The seller agrees to participate in this transaction with a portion of his equity. The verbiage that is included into the
agreement should read something like this: 'The seller agrees to pay a service fee to THE
BUYER'S FUND, INC. in the amount of $10,000.00, to be paid at the close of escrow."
2. The lender submits a one-page
grant application to The Buyers Fund, Inc. this can be done online or faxed to (619) 255-7442.
This application has been simplified where signatures are NOT required from the buyer or seller.
3. Upon receipt of the grant application, within
a couple of business hours, a confirming gift letter is faxed back to the lender and a copy also goes to the buyer. This confirmation
letter becomes a part of the loan file package.
4. A couple days before the close of escrow, Neighborhood Gold personnel contact
the escrow company and inform them of wiring instructions. Upon acknowledgment from the escrow company, the funds in this
example of $9,000.00 for the down payment are wired by The Buyer's Fund, Inc., to the escrow company.
5. At the close of escrow two things happen; first,
the buyer is enrolled into the Mortgage Payment Protection program in the event of an involuntary loss of job. They are protected
for ONE-FULL YEAR from the date of closing. This protection provides up to SIX-MONTHS of payments (maximum of $1,500.00 per month) after a two-month vesting period. The second, from the
seller proceeds, $10,000.00 is worried back to The Buyer's Fund, Inc., thus replenishing the pool of funds to allow future
funding of other transactions.
Everyone
Wins in the Transaction:
The o ahead
- The seller still receives his $521,250.00
bottom line that they are willing to take for the property. By allowing the Down Payment Assistance in the transaction, it
opens the door for more qualified buyers to sell too.
- The buyer receives a grant / gift in the amount of $9,000.00 without
an obligation for pay-back. In this example, if the buyer's only down payment are those from the grant, their mortgage
amount would be $291,000.00.
- The agent on the selling and listing side benefit, because they have sold the property at the higher
price of $521,250.00 and have earned a higher commission on the sale.
- The Lender is provided with buyer whom otherwise may not have
had the ability to purchase the property. Also provides assurance of funds being there on time to help expedite the closing
and funding of the loan.
| You would be hard pressed to find a program that would be any better for REFERRALS and the opportunity to increase your business. This program helps people obtain homes
and sell homes. When
you offer Down Payment Assistance to those that you have helped it is easy to get the attention
of others that they are close to others who may also need the kind of services that we are offering here. Your biggest challenge is making people
aware of the program and finding those ideal properties that will work for the buyer. We lenders and you agents are instrumental
to the success of our clients. On the next page a list of IDEAL PROPERTIES FOR DOWN PAYMENT ASSISTANCE can be found to identify your greatest
opportunities for your buyers / borrowers. These properties can be searched on the Multiple Listing Service (MLS) to determine
where they can be found. |
IDEAL
PROPERTIES FOR DPA:
1.
Vacant Property:
When you find a vacant property, chances are someone
has moved for a reason. They could be in financial trouble or be making more than one payment on a property. These types of
properties are great to use DPA to help sell.
2.
Price Reduction:
The question that must be asked is why the price reduction?
Chances are the seller is eager to sell the home and have reduced the price for a faster sale. When a seller offers DPA as
an alternative rather than reduce the price, it opens up all kinds of possibilities to sell their home and increase their
pool of potential buyers.
3. Motivated
Seller:
When a homeowner decides to sell their property they often want
it to happen quickly. It is easy to increase your pool of buyers by offering DPA. With neighborhood Gold's national presence
and thousands of successful transactions our experience tells us when DPA is offered on a property, it virtually eliminates
stressful negotiations.
4. Listing
Longer than 30 Days:
The key is to sell the property in the shortage
amount of time at the highest possible price for the seller. When a property goes beyond 30 days some kind of marketing stimulus
may be necessary to cultivate interest in the property. DPA is a creative solution.
5. Location or Cosmetic Problem:
If
a property is located on a busy street, cabinets need to be updated and/or flooring need to be replaced, DPA is the answer.
Buyers can preserve cash for improvements or make the property more desirable to the buyer DPA.
6. Seller is Offering Incentives:
Buyers
are looking for reasons to buy and meaningful incentives are popular closing tools for any property. Offering DPA is a perfect
solution for the seller. A non-repayment grant to the buyer is one of the most powerful incentives that can be offered.
7. Value of Range Properties:
This
concept for pricing of homes is ideal for DPA. With the higher range of the value placed on the property and with a grant
also included, as an incentive to the potential buyer, the pool of buyers will be increased significantly. Neighborhood Gold
also provides rider signs that say "DOWN PAYMENT GRANT AVAILABLE" that stimulates
interest and phone calls on the property.
Charitable Causes:
in addition
to fulfilling the mission of our nonprofit status, we have found other ways to contribute to the general welfare of society.
The Buyer's Fund Inc™., and Neighborhood Gold® have donated over $647,212 to various charitable causes. The
following is a list of organizations that have received assistance:
Habitat for Humanity,
Big Brother / Big Sister, The Red Cross, Toys
for Tots, Muscular Dystrophy,
Far West Historical Foundation , American Coalition for Homeownership, Various churches of different denominations, Various schools and school districts, Various
youth sports programs, Art foundations,
Women's shelters.
Charitable Causes:
in addition to fulfilling the mission of our nonprofit status, we have found other ways
to contribute to the general welfare of society. The Buyer's Fund Inc™., and Neighborhood Gold® have donated
over $647,212 to various charitable causes. The following is a list of organizations that have received assistance:
Charitable
Causes:
in addition to fulfilling the mission
of our nonprofit status, we have found other ways to contribute to the general welfare of society. The Buyer's Fund Inc™.,
and Neighborhood Gold® have donated over $647,212 to various charitable causes. The following is a list of organizations
that have received assistance:
Charitable Causes:
in addition to fulfilling the mission of our nonprofit status, we have found other ways
to contribute to the general welfare of society. The Buyer's Fund Inc™., and Neighborhood Gold® have donated
over $647,212 to various charitable causes. The following is a list of organizations that have received assistance:
Involuntary
Unemployment Insurance
In addition to the contributions listed above, we also focus our charitable-giving efforts
by helping people not only purchase a home but stay in it during times of financial difficulty. With this insurance, homeowners
can continue to pay their monthly mortgage payments in the event of an unforeseen job loss.
To date, we have contributed over $1,073,768.00 to help pay for the cost of unemployment
insurance for homeowners who use the Neighborhood Gold down payment assistance program.
QUESTIONS
& ANSWERS:
Q HOW MUCH DOES IT COST
FOR THE NEIGHBORHOOD GOLD MORTGAGE PAYMENT PROTECTION?
HOW
MUCH DOES IT COST FOR THE NEIGHBORHOOD GOLD MORTGAGE PAYMENT PROTECTION? A There is no cost for this significant protection benefit. This payment protection
plan protects both the homebuyer and the lender, ensuring that mortgage payments for at least six months will be made to the
lender if the primary borrower involuntarily loses his or her job during the first year of the loan.
Q CAN THIS PROGRAM BE USED ON ANY LOAN?
A Any FHA, Conventional, or Sub-Prime loan that allows
a gift from a nonprofit organization can use the program, provided that the agent / lender has had proper training and is
able to assist in the functionality's of this program.
Q DOESN'T THIS PROGRAM SIMPLY MEAN THE PRICE OF A HOME IS RAISED
TO COVER THE FUNDS?
A No. An independent appraiser substantiates the market value of the home being purchased using our grant. The
appraiser must substantiate the value of the home based on sales of comparable properties. The price of a home cannot be higher
than it's appraised value.
Q
IS THE SELLER PAYING FOR THE BUYER'S DOWN PAYMENT?
A No. The grant comes from an existing pool of funds
operated by the Buyer's Fund, Inc. After closing, the seller pays a service fee that replenishes the fund for the next
buyer.
Q ARE YOU FHA-APPROVED?
A
FHA does not approve any down payment grant programs; it is the responsibility of lenders to ensure that
down payment assistance programs meet official guidelines. In HUD Mortgagee Letter 00-8, dated March 3rd, 2000, signed by
William C. Apgar, Assistant Secretary for Housing-Federal Housing Commissioner, it states:
"Their has been widespread confusion regarding
the Department's role in approving DOWN PAYMENT ASSISTANCE programs in the form of gifts. FHA does not approve DOWN PAYMENT
ASSISTANCE programs in the form of gifts administered by charitable organizations. Mortgage Lenders
are responsible for assuring that the gift to the homebuyer from the charitable organization meets the instructions
described in HUD Handbook 4155.1, REV-4, Change 1 (e.g. no repayment implied, etc.). Thus, while FHA will issue approval letters
to nonprofit agencies for their participation as mortgagors, providers of secondary financing and as purchasers of HUD homes
at a discount, such letters are not to be construed as approval of the nonprofit agency's DOWN PAYMENT ASSISTANT GIFT
programs. FHA will not issue approval letters for down payment assistance gift programs."
Q ARE THERE ANY INCOME LIMITATIONS FOR POTENTIAL
HOMEOWNERS?
A There
are no income limits. If a buyer is approved for a loan, they can receive the grant funds.
Q IS THE SELLER SERVICE FEE A SALES CONCESSION?
A No. Many sellers consider this program an extremely effective way to increase the pool of potential buyers
for their home and to sell their home faster. Additionally, neither FHA nor Conventional organizations considers it a sales
concession. FHA allows 6% of the sales price still to pay for closing costs, prepaid, and 2-1 buy-downs. Conventional allows
the seller to pay 3% of the sales price towards closing costsw and/or 2-1 buy-down.
Q IS THERE A MAXIMUM GRANT AMOUNT ALLOWED?
A No. The only limit is the difference from the seller's bottom line and
the appraised value of the home. If buyer's are trying to obtain a larger grant, they may need to find a distressed home
in order to give the seller sufficient room to pay the service fee.
Q WHAT ARE THE FEES INVOLVED?
A No. The only limit is the difference from the seller's
bottom line and the appraised value of the home. If buyer's are trying to obtain a larger grant, they may need to find
a distressed home in order to give the seller sufficient room to pay the service fee.
Q WHAT ARE THE FEES INVOLVED?
A No. The only limit is the difference from the seller's
bottom line and the appraised value of the home. If buyer's are trying to obtain a larger grant, they may need to find
a distressed home in order to give the seller sufficient room to pay the service fee.
Q WHAT ARE THE FEES INVOLVED?
A No. The only limit is the difference from the seller's
bottom line and the appraised value of the home. If buyer's are trying to obtain a larger grant, they may need to find
a distressed home in order to give the seller sufficient room to pay the service fee.
Q WHAT ARE THE FEES INVOLVED?
A The only fee involved is a service fee paid by the
seller, this fee is the GRANT AMOUNT PLUS $1,000.00 OR 10% of the FUNDED AMOUNT to the BUYER. Example, if the grant amount
is below $10,000.00 the fee is $1,000.00 in the case of a $15,000.00 grant to the buyer, the service fee is $1,500.00 = $16,500.00.
Q IF THE HOMEBUYER DOES NOT QUALIFY FOR MORTGAGE
PAYMENT PROTECTION, CAN THE HOMEBUYER STILL RECEIVE A GRANT?
A Absolutely. The Mortgage Payment Protection is a benefit, but not a required
part of the grant application.
Q
IS THE NEIGHBORHOOD GOLD GRANT TAX DEDUCTIBLE?
A There are two tax deductions to consider: (1) A deduction against capital
gains and (2) a charitable deduction. This grant can be a deduction against capital gains. Capital gains are taxed on a primary
residence if the gain is 500k or more. Capital gains are always taxed against investment properties. The fee to the seller
can reduce their capital gain, as does a fee to a agent or title company. If a taxable capital gain occurs with the sale of
an investment property, then our fee can be deducted as a cost of sale, in the same manner as an agents commission or closing
costs are. The seller service fee does not qualify for a charitable contribution because the seller is receiving a service
in return for the donation, and under IRS rules, the donor may not receive services or goods in return. However, we would
encourage you to verify any tax related questions or concerns with your tax accountant, we are not professionals in this realm
or able to give any legal advice in this matter.
Q WHERE IS NEIGHBORHOOD GOLD LOCATED AND ARE THEY A NATIONWIDE COMPANY?
A Neighborhood Gold is located in Provo, Utah and has
provided down payment grants in virtually every state and have representatives throughout the entire United States. Our please
be sure to contact someone who is familiar with this process and can best represent you and your needs in this matter.
Q WHO FILLS OUT THE BUYER'S FUND, INC.
GRANT APPLICATION?
A The
loan officer completes the application and submits it to The Buyer's Fund, Inc, for approval. Once approved, a gift letter
confirming approval of the funds is sent from The Buyer's Fund, Inc., to the lender. Homebuilders, homebuyers, or sellers
who are interested in participating in the program should work closely with their loan officers to take full advantage of
this program.
Q DOES NEIGHBORHOOD GOLD PROVIDE MARKETING MATERIALS?
A Yes, we have several brochures available in both English and Spanish that
can be used to market to agents, builders, prospective homebuyers, and others who can benefit from using our program. We are
also working on additional information for both lenders and agents that explains the benefits of the Neighborhood Gold and
it's program even more completely.
Q
WHY WOULD A SELLER PAY A FEE TO THE BUYER'S FUND, INC.?
A Typically it can take weeks or even months to sell
a home. Most sellers are anxious to sell their home, and they often reduce their price significantly and make other concessions
in the process of making a sale. The program allows a seller to substantially increase the pool of potential hombuyers interested
in the buying of his or her home from the very beginning. This often means a sale will be made more quickly and, most likely,
for the full sales price -- all benefits that are well worth the seller participating in the Neighborhood Gold program.
Q HOW DO WE KNOW IF OUR WHOLESALE LENDER IS
APPROVED?
A We
have a list of lenders across the country that accepts our program on FHA, Conventional, and Sub-Prime financing. Many lenders
do not have "approval process" and therefore, are not reflected on our list.
Q DOES A BUYER HAVE TO REPAY THE FUNDS RECEIVED
THROUGH THE DOWN PAYMENT ASSISTANCE PROGRAM?
A No. This is a grant, a bona-fide gift that the buyer does not have to repay. The grant
is given when the seller agrees to participate in the program by reimbursing the grant amount, plus a service fee, after closing.
Q CAN
FUNDS FROM THE PROGRAM BE USED TO PURCHASE CONDOS, APARTMENTS, DUPLEXES, ETC.,?
A The funds from the Neighbored Gold program can be
used to purchase any property, provided that the buyer qualifies for the type of loan and has approval status.
Q HOW DO I APPROACH A SELLER WITH AN OFFER
USING THIS PROGRAM?
A You need to be straight forward and keep it ver simple. Have them visit this site
for more information on how they can get involved.
