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8/7/2019 HUD Escrow Guide for Selling Agents and Buyers
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1
8/7/2019 HUD Escrow Guide for Selling Agents and Buyers
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Welcome Everyone!
InvolvedinthePurchaseofaHUDHome?
IfyouaretheBuyer,CongratulationsonyourdecisiontopurchaseaHUDHome!
Wehopeyouenjoyyournewhomeformanyyearstocome.
IfyouaretheRealtor,Congratulationsonhelpingyourclients intotheirnewHUDhome!
Infortyfivedaysorless,wewillbeclosingyourtransaction. Weareworkingonyouescrowfromthedaywe
receiveyourcontractandearnestmoneydeposit,untilthedaywerecordandclose. Inbetweenweare
workingwiththeAssetManagerandtheFieldServiceManagersalongwiththeBuyer,theLender,thetwo
Agentsandtherestoftheusualparties. Everyonehasdifferentdutiesandwerelyoneveryoneinvolvedtodo
theirpartwhenneededthroughouttheescrowperiodinordertocloseontime. Pleasetakealookthrough
thispackagetoseewhatsahead,howtobepreparedandletusknowifyouhaveanyquestions.
Wehaveoutlinedafewkeyturntimesthatwedliketosharewithyousothatwesetrealisticexpectation
levelsforourcertaintasksanddutieswhileworkingwithus. InthisEducationalOutreachPackageof
information,wellexplaintheclosingprocessalongwiththetargetnumberofdaysforyoutoexpecttoreach
differentstagesinyourescrow,wellalsoaskandansweralotofquestionsthatcomeupmorethanyoud
thinkandgiveyouallofourcontactinformationaswell. WellcoverFAQsforSellingAgentsandPurchasers,
lookatwhatcouldgowrong,howwegothereandhowtoescalatemattersifandwhenneededduringyour
escrow.
Wewantyoutoknowthatwecareabouteachandeveryescrowthatwereprivilegedtohandleandeachandeverypartyinvolvedtoo. Wedliketoaskthatinordertoserveyouallbest,pleaserespectourturntimes. If
wehavegonebeyondour10dayslimitwithoutgettingescrowinstructionsouttoyouforexample,please
contactus;butpleasedotrytogiveusthetendays.
Onceweopenescrow,wewanttocloseitassoonaspossible. Pleasetakealookatthenextpagetoseethe
LifeofaHUDEscrowflyer. Thereisquiteabitofinformationtherethatgivesagoodoverviewoftheclosing
process.
Tothatend,onceescrowisopened,allpartiesinvolvedreceiveaninvitationtotheirescrowonlinewithalink,
a
username
and
password.
This
information
will
be
the
same
for
all
escrows
with
Tiempo
Escrow
II.
It
allows
allpartiestobeinformedandtobeablegoonlineanytimeofanydayandbeintheloop.
Thankyoufortakingthetimetoreadthroughthisinformation.
WelookforwardtoseeingyouinEscrow!
DeidreDzandzara RJBurke
ChiefHUDEscrowOfficer ContractingOfficer
TiempoEscrowII TiempoEscrowII
8/7/2019 HUD Escrow Guide for Selling Agents and Buyers
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8/7/2019 HUD Escrow Guide for Selling Agents and Buyers
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ESCROWFAQsFebruary2011EscrowTurnTimes
1)EscrowInstructions OUT 10daysfromAcceptance
2)HOAs infoNeededafterOpeningofEscrow. 10daysfromAcceptance
3)
MyLoanDocumentsareready,whendoweClose? 10DaysLater
4) Buyersfinaldeposit 5DaysfromCOE
5)REPLYSTO: EmailsandVoicemails 24to48hours
SettingExpectationsThisisthepurposeoftheinformationgivenabove.
Pleasesendyourinquirytothedepartmenthandlingthepartofthetransactionforwhich
youareinquiring. PleasereferencelefthandsideofthetheLifeofaHUDEscrowflyerfor
thecorrectdepartment.
Ifwerespondinsaidtime,hereshowtostepupeffortstoresolveyourmatter:
First,Emailthedepartmenthandlingthisportionofthetransaction,
Thenallow24hoursforareply.
Second,iftheresnoreplyfromusin24hours,
Pleaseforwardemailsentdaybeforeto:HUDEscalations@te2corp.com
8/7/2019 HUD Escrow Guide for Selling Agents and Buyers
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ESCROWEVENTSTIMELINE &WhatCouldGoWrong? (WCGW?)
1STHALFOFTHEESCROW(TheBeginningoftheEscrow=Easy)
1)SignedContractReceivedFromAM (Day 0)
2)EscrowisOpened,PutOnlineandWelcomeNoticesaresenttoBuyerandtheirAgent
3)EarnestMoneyDepositReceivedWiththeContract.Opentitleorder.
*WCGW? Buyerwantstocancelforvariousreasons
PreliminaryTitleReportarrives,showingownertobeformerlender¬HUD
4)EscrowInstructions/PackagesareSenttoAllParties(10daysafterEscrowOpened)
5)SellingBrokerSignedCommissionIn(&CDA,IfApplicable)(20daysafterEscrowOpens)
6)EscrowInstructionsSignedbyBuyerReceived(20daysafterEscrowOpens)
2ND
HALFOFTHEESCROW(ClosingtheEscrow=NotalwayssoEasy)
7)ESCROWREQUESTSLOANDOCUMENTS(10daysbeforeCOE)
***THENEEDFORMOSTESCROWEXTENSIONSISCREATEDHERE***
*WCGW? LoanConditions historically,theredbe3 10perloan,buttoday,
thereareroutinely20to40LoanConditions,andweveseenupto65.
LateDiscoveryoftheExistenceofan:HOA,NewLienorSubstandardCondition
Appraisal
Issue
(date
of
appraisal
could
be
too
old,
or,
its
value
too
low)
UnsourcebleFunds (wheresyourdownpaymentcomingfromagain?)
Overbidding ABuyeroverbidstosecurewinningbid. Thepriceoveragemust
bepaidforincashandnotaddedtotheloanforappraisalreasons.
*Buyersdontusuallyseemtounderstandthisuntilitstimetocloseescrow.
LenderslackofexperiencewithHUDpropertiesandrepairholdbackloans
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8)LoanDocs* UpdateDemandsandotherfileexpensesrequestedtopreparesellersHUD1
AllLoanDocumentshavetobereviewedforaccuracytomatchthecontractpriortobuyers
signature
AlloftheLoanConditionsmustbeclearedpriortoFundingLoan
8.5)
ALL
CASH
DEALS
The
only
thing
that
could
cause
an
issue
with
an
all
cash
deal
closing
would
be
the
late
discoveryofanHOAorlatediscoveryofMunicipalLienfilings
9)EstimatedHUD1iscreatedandsenttoSeller(AM)forApproval(onceallupdatesarereceived)
10)LoanDocumentsareSentBacktoLender
11)SellingBrokersSurveyReceived
12)BuyersHUD1AddendumReceived
13)BuyersSurveyReceived
14)BuyersFinalWire/DepositReceived
15)5DaysCOE)
26)ChecksCopiedfortheEscrowFile(1day>COE)
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WhatCouldGoWrong?&WhatHappens(WH)
WCGW
1:
EarnestMoneyDepositsnotarriving,forvariousreasonsWH:Wecanceltheescrowondayfour. (*WH=WhatHappens)
WCGW2: LendersgenerallackofexperiencewithHUDpropertiesandrepairholdbackloansWH: Thisresultsinlotsoflostescrowtimeeducatingtheselenders.
WCGW3: LenderLoanConditions: Longlistsofloanconditionsmustbesatisfiedbeforetheloanisabletobesignedbythebuyer. Eachconditionmustbeindividuallyaddressedinordertoclearitfromthelist.
Historicallyyoumightfindfourtotenconditionsthatneededtobeclearedperloanversusthetwentytoforty
pluswereallseeingtoday.
WH: Thiscantakeafewminutestoadaytocleareachone. Mostloanstakeagooddaytocleartheir
conditionslist,andafairnumberrequireworkovertwodays.
WCGW4: LenderFundingConditions:afterthesignedloandocumentsarereturnedtothem,theirunderwritersevaluatethefileagainandoftengenerateadditionalconditionswhichmustbesatisfiedbefore
thelenderfundstheloan.
WH: Theseareontopofallthelendingconditionsclearedbeforethebuyercouldsign. Thisagaintakes
timetrackingdowntheborrowerand/ortheiragenttogetthesenewlenderconditionssatisfied. Generally
thisisjustasmallirritatingspeedbump,rarelycausesdelays.
WCGW5:UndiscoveredHOAs WH: WeimmediatelyordertheCC&RsandtheHOAspayoffdemand. Thisissueoftheexistenceofan
HOAusuallycomesupafterloandocsarereceived. Thisisimportantbecauseitisalsousuallyaconditionof
salethatthebuyer,aspartofhisduediligence,getstoreadtheCC&Rsandacceptorrejecttheproperty
basedonhisreviewoftheConditions,CovenantsandRestrictionsthatgovernthepropertyhehasunder
contract. Thebuyerhastherighttocancelduringthisapprovaltime. InadditiontotheCC&Rs,weneedto
getapayoffstatementfortheHomeOwnerAssociationtooandsendanewHUD1intoM&Mforre
approval.
This
can
be
a
pretty
big
speed
bump
on
the
occasions
it
occurs
and
can
cost
the
escrow
several
daystomanyextradaysclosing.
WCGW6:UndiscoveredLiensWH: WeimmediatelyorderthedemandupondiscoveryandrevisetheHUDforreapproval. Thiscanadd
severaldoesforthemunicipalitytogetusthedemand,uptoten,thenafewmoredaysforanapproved
HUD1tofollow.
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WCGW7: GrantDeedcanexpireduetoG.D.sShortFuseof5Days WH: WerequestanewGrantDeedfromtheAMwhentheloanisreadytofund. Ifthefivedayshave
passedandwevenotfundedandrecorded,wenotifytheAMwhosendsanewGrantDeedtous,andwe
returntheGrantDeedthathadexpiredtothem. Wethencommencewiththeclosing. Itsnotsomucha
speedbumpasitisafourthballthrownintoajugglerwiththreeballsintheair. Itbecomesanothermoving
partatthecloseofescrow. Ifweneedanother,itcancosttheescrowadayinclosing.
WCGW8: NEWLENDERNEEDSTHEOLDCASENUMBERMostSellingAgentsneedtoknowtheFULLFHACASE#ofthepropertytheyjustsoldinordertopassitalongtothenewlender. Thisslowsthenewlender
downwhentheRealtorisunabletoreadilyprovideit.
WH: Therealtorcallsusinarush,orthelendercallsusinarushfortheinformationanditcausesalittle
speedbumpinthebeginningofthetransaction.
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TiempoEscrowIIHUDClosingAgentSoCalMMIII
SELLINGAGENTFAQs
Q1:PreSale ShowingsAnyTipsOnShowingProperties?
A1:KnowyourPropertyFinancingCodes
Makesureyouknowwhatyoureshowing,andmakesurethatyouryourbuyerknowswhattheyare
lookingattoo. HUDPropertysfallintooneofthreeFinanceCategoriesorCategoriesofRepair:
1)IN(Insurable)NorepairsneededitsregularoldFHAdeal2)IE Underfivethousanddollarsinneededrepairs*3)UI Overfivethousanddollarsinneededrepairs**Basically,theLenderholdstheserepairfundsandreimbursestheBuyeruntiltherepairsare
completed.
A2:FinancingGetaLoanorAllCash?
AllCashorFinancing? AccountStatementsorPreQualificationLetter
IfIEorUI,makesureyourBuyerworkswithaLenderwhocando203(b)and203(k)loans.
Thelenderisresponsibleforholdingbacktherepairportionoftheloanproceedsandreleasesitto
thebuyerastheycompletetherepairs. So,thelendermustalreadybesetuptodothis,orbe
preparedtoacceptandperformthisservicingfunction. Thislackofexperiencecouldextendyour
deal,orworse. Itsometimescomesasasurprisetolendersthattheirinvolvementextendsbeyond
theclosingdate,aftertheysaytheycandoyourFHA203loans.
Therepairamountcanbe$5,000andincludeextra10%andstillbea203(b)loan.
Q2:RequirementsForMakingTheOffer(ALLTHEFORMS)
*PleaseaskyourAssetManageranyquestionsyoumayhaveregardingthis!
CarefullyworkfromtheAssetManagersChecklistforbothOwneroccupiedhomesandInvestor
Purchasedhomes. InordertomakereadyandsubmitacompleteandlikelysuccessfulOfferPackage
Submission,everythingonthatchecklistmustbecheckedoff.
A:FindYourCompleteOfferPackageChecklisthere: PemcoSalesFormsarefoundhere:
http://www.hudpemco.com/2S_forms.htm
BLBResourcesSalesFormsarefoundhere: https://www.blbresources.com/ https://www.blbresources.com/newdocs/2S%20Selling%20Broker%20Quick%20Reference%20Guid
e.pdf
Q3:TIPSonMakingTheOfferAnyTipsOnSubmittingOffers?
A1: BiggestTipthereis:SubmitaCompleteOfferPackage!
1)LenderSubmitthenameandcontactinformationfortheLender, 2)VestingCompleteLine2CompletetheVestingInformation, 3)FullNameandFullCompanyNameAlso,pleaseprovideyourcompletecontactinfo.
8/7/2019 HUD Escrow Guide for Selling Agents and Buyers
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A2: 2ndBiggestTip: BeforeYouSubmitYourOffer,youmust.FromtheHUDHomeStore.comwebsite,makesuretodownloadallformsfromtheAMwhichare
associatedwiththepropertyyouresubmittingabidon. Ifyourethewinningbid,youwillneedthem.
Theseformsarenotavailableafteranofferhasbeenaccepted.
Q4:IReceivedanAcceptanceNotificationviaEmailNowWhat?
A:HOA&ManagementCompany
SellingAgentsshouldimmediatelycoordinatewiththeLLBtotoseeifthisinformationhasalready
beensecuredorifitisstillneeded. Inmanycases,theLLBswillhavealreadysecuredthisinformation
duringtheirprelistingroutines.
Ideally,HOAandManagementcompanyinformationwouldbeprovidedtoEscrowwiththereturnof
theopeningdocuments,orsooner.
Q5:IReceivedMySignedContractsbyEmail NowWhat?
A:
Escrowreceivedthesamenotificationatthesametimeandwillopenescrow.
TheSellingAgentshouldcheckwiththeLLBonthestatusofhavingtheHOA/Mgmt.Companyinformation.
Q6:EscrowOpens Howdoestheescrowgetstarted?
A:
EscrowisnotifiedofthesalebyemailfromtheAssetManageroncetheofferhasbeenaccepted. This
emailalsogoesoutsimultaneouslytotheSellingAgentandtheLocalListingBroker.
Q7:WhatsortofTurnTimescanweexpectfromEscrow?
A:
Samedayresponsetoemailsandvoicemails
10daysforescrowinstructions,orless (***PLEASERETURNORIGINALSWITHWETSIGNATURES)
10daystoclosefromsigningloandocuments
GoOnlineanytime,tocheckonyourescrowandcommunicateasneeded.
Onceonline,youcaneasilycheckthestatusofyourescrowsprogress,andifneeded,youcanemail
yourescrowofficer,agentorlendereasilytoo.Peaseseeattachment.
Q8:WhatdoesEscrowneedfromus,theHUDSellingAgent?
A:
#1)GettheRightLender CheckOutYourLenderfor203(b)and 203(k)experienceand
referencesbeforesubmittingyourofferoryourloanpackage. Alenderwhoiswillingtolearn,is
learning
on
your
dime
because
of
delays
and
extension
fees.
Dont
wait
to
confirm
their
ability
to
deliverbeforeyouandyourbuyerarefortyandfiftydaysintoescrowandmaybeneedanewlender.
#2)SubmitaCompleteOfferPackagefortheHOMEOWNER
#3)SubmitaCompleteOfferPackagefortheINVESTOR
Q9:HowcanIProactivelyAssistinclosingeachescrow?
A:
ThereareavarietyofwaystheSellingAgentsmayassist.
Hereareafew:
HOA&MgmtCos Checkw/LLBs,findtheMgmt.Companybyknockingondoors
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GoodOffersPackages CheckoverallofferspriortosubmittingthemtoyourAM
GoodLenders MakesuretheycandoFHA203(b)and203(k)Financing!!!GoodLoanPackages Confirmthebuyerissubmittingacompletepackage*
* Followupontheloansprogresstwiceperweekminimum(2xsperweek).
Q10: WheredoIgettheTermiteReport?
A:
1)IfFHAfinancingisbeingused,contacttheAMforthatTermiteReport.2)IfConventionalFinancingisbeingusedoronanallCashdeal,theAMdoesn'torderatermite
report,andthebuyerwillneedtoorderandpayforthatreportthemselvesshouldtheywantone.
Q 11 Utilities GoToyourAssetManager(PemcoorBLB)foreverythingrelatedtoUtilities!
A:
WorkwithyourAssetManagerandtheFieldServiceManagerforhomeinspectionsandutilities
Formsareavailableontheirwebsites:
Pemco:http://www.hudpemco.com/2S_forms.htm
BLB: https://www.blbresources.com/
https://www.blbresources.com/newdocs/2S%20Selling%20Broker%20Quick%20Reference%20Guide.pdf
Q12:HowdowegoaboutEscrowExtensionsHowdoesthiswork?
A:
StartEarly5or6DaysPriortoScheduledCloseofEscrowDate
1)TheSellingAgentisresponsibletosubmit a.Completedforms,alongwith b.TheProperExtensionFeeamount
i.ifitis$25korlessitis$150 ii.ifitis$25k $50kitis$225iii.ifitis$50ormore,thanisit$375.00,
c)Alldeliveredtoescrowforapproval five(5)dayspriortothescheduledCOEdate
2)EscrowthensubmitsittotheAMforapproval,3)AMreviewsExtensionRequestFormandifApproved,Notifiesescrowoftheapproval, 4)EscrownotifiestheSellingAgentandBuyeroftheExtensionApproval.
Inordertobegrantedanextensionpastyour45dayescrowperiod,weneedacompleted,approved
andpaidfor($375)extensionbyorbeforeyourclosingdate. Extensionsaregrantedin15day
incrementsandunuseddaysareproratedandcreditedbackatclosing.
TheextensionformsareavailableontheAMswebsite.
Iftheescrowclosesonedaypasttheextendedtodate,anew15dayextensionmustbeobtained.
Pleasedonotbeslowaboutgettingyourextensions,theytakeseveraldaystogetapproved.
1stExtenstionNoLenderLetterrequired. IfFHAfinancing,nofee.
2nd
,3rd,4
th,5
thExtensionLenderLetterisrequiredwithExtensionFormsubmission.
Q13:AreourEscrowsOnline? IsthereaneasywaytotrackourHUDescrows?
A:
Yes,allescrowsarepostedonline. Thepartiesreceiveawelcomeemailtotheescrowwithausername
andpasswordandalinktogoonlineandlogin. Ifyouhaveateam,andwouldlikethemtoallbe
8/7/2019 HUD Escrow Guide for Selling Agents and Buyers
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notifiedatonce,wecanhavethenotificationsandupdatesgotomultiplepeopleinthesameoffice
whodecidehowtobesthandleeachemail.
Q14:WhatAboutNotarys?Formybuyersconvenience?
A:
1)OnsiteOfficeAppointmentAcomplimentaryNotaryisincludedinyourHUDClosing,providedtheloansigningappointmentis
conductedduringregularbusinesshours.whichareMF/8amto4 pm,inourRiversideand
LagunaNiguelOffices.
2)OutsideNotary OffsiteatBuyersConvenienceandExpenseWearerequiredtoarrangethenotary. TheBuyercantsignatorbeaffiliatedwithagentsorlendersofficeandmustbeneutral3rdparty
notary.
Buyerhastopaythenotaryattimeofsigningandweuseourownlist/companythatwaywecanmakesuretheyarenotaffiliatedwithlenderetc.
Q15:PreliminaryTitleReports Whatabouttitleinsurance?
A:
ThisisorderedbytheClosingAgentfromtheapprovedHUDTitleCompanylist.
IftheBuyerwantstochoosetheirowntitleinsurancecompany,therequestformmustarrivewiththe
SalesContractfromtheAMandthetitlecompanymustbeagreeabletotheHUDTitleGuidelines.
BuyermustincludetheirrequestwhensubmittingtheiroffertoAM
PleaseFindAttached:1)theHUDTitleGuidelinesforprovidingtitleinsuranceonHUDhomes,2)the
nonapprovedtitlecompanyformforthebuyerstosignand3)thelistofapprovedTitleOffices.
*Attachment(s)ToFollowWebinar
Q16:IstheretrainingavailableforTiempoEscrowIIsClosingTracker?
A:
ToBeAnnounced
Q17:CancellationsHowdowecancelanEscrow?
A:
FindFormonAssetManagers(AMs)website.
PEMCO/BLBhascertainrequirementsforcancellations.
PleasecontactAMfordetailsonpropercancellation.
*Q18:Appraisal?
A:
TheBuyersLenderordersaNewAppraisal.
Q19:RepairEscrows? AndFundsRelease? EachLenderdoesitdifferently.
A:
Escrowsendsthepredeterminedrepairfundsamounttothelenderatthecloseofescrow.
Thereisusuallya$200feetotheBuyerforaccountsetupandfinalinspection.
Thereisusuallysomesortofleaseholdagreementstatinghowlongthebuyerhastogetthework
done,andwhattheyneedtodotogettheirrepairfundsreleasedtothem.
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Eachlenderhasdifferentpoliciesondoityourselfvs.contractor,reimbursementsandotherthings.
Q20:HOAAlerts? WhyisitintheToDoListstill? Thereisntone,Ithink.
A:
Thereisasmallpercentagechance,evenwithalloftheresearchdone,thatthepropertymayturnout
tobeaPUDandhaveanHOAwhichweonlydiscoverwiththearrivalofLendersLoanDocuments.
WeleavethealertintheToDoList,untilwecanconclusivelyconfirmthatthereisnoHOA/PUD.
Q21: EMDCashiersCheckfromeitherCABankorUSPS
A:
PleaseCheckwithyourAssetManager,theyreresponsibleforcollectingit.
TheBuyersEarnestMoneyDepositshouldaccompanytheOfferandwillbereturnediftheofferis
rejected. Itmayonlybeinoneoftwoforms. ItmusteitherbeintheformofeitheraCashiers
Check,drawnonaCaliforniaBank,oritmustbeaUSPostalServiceCashiersCheck.
Q22: WhatAboutaChangeofContractTermsFinancing,OffereesandHoldback$?
Forexample:
1)TheBuyerchangestheirfinancingtoAllCashortoincludeaLoan,fromallcash.
2)TheBuyeraddingorremovingsomeone.
3)Therebeenachangeinamountofrepairholdbacktotal.
A:
Go totheAssetManagerswebsitetogettheproperrequestform
SubmittheOriginalFormwithawetsignaturetotheAssetManagerforapproval.(pleasedonot
signacopyoftheform)
Theyllnotifyescrowwhowilldrawamendedescrowinstructions.
Pemco:http://www.hudpemco.com/2S_forms.htm
BLB:
https://www.blbresources.com/
https://www.blbresources.com/newdocs/2S%20Selling%20Broker%20Quick%20Reference%20Guide.pdf
Q23:Whendoesthe45daystocloseescrowstart?
A:
FromtheDateofAcceptanceoftheBuyersContract.
Q24: HowwillIknowwhenMyEscrowisClosed?
A:
Yourefirstnotificationwilllikelycomeasanalerttoyouremailfromouronlinesystemasweupdate
theToDoListandcheckofftheClosedbox.
ThesecondwilllikelybeaphonecalltotheSellingAgenttheirescrowofficeortheirassistant.
WealsoposttheclosingdateintoP260thedayweclose.
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TiempoEscrowIIHUDClosingAgentSoCalMMIII
HomePurchasingFAQs
Q1: HowlongdoIhavetoclose?WhatifIneedmoretime?
Closingtimeframesare45days. Salestransactionsshallclosewithinthetimeframespecifiedonyourstate/regionalForfeitureandExtensionPolicy(AddendumA,Rev111306). Propertiesmay
closeinlessthanthetimeframespecified. However,theamountofdaysspecifiedaboveforyour
state/regionalareaMUSTbeenteredontheHUDSalesContract.
Ifclosingdoesnotoccurwithinthetimeframethenextensionfeeswillapply.TheBrokermust
submittheextensionfeeandawrittenrequestforanextensionregardlessofthereasonforthe
delayinclosing.TheExtensionRequestFormisavailableontheAssetManagerswebsite. Formsareavailableontheirwebsites:
Pemco:http://www.hudpemco.com/2S_forms.htm
BLB: https://www.blbresources.com/
https://www.blbresources.com/newdocs/2S%20Selling%20Broker%20Quick%20Reference%20Guide.pdf
Exception:Thereisoneexception,ifabuyerpurchasesahomewith203(k)financing,theinitial
escrowperiodisextendedto60daysatnoadditionalcosttothebuyer.
Q2: WhatisOfficer/TeacherNextDoor?
OneofHUDsSpecialSalesProgramundertheGoodNeighborInitiativesistheOfficerNext
Door/TeacherNextDoor(OND/TND)program.TheOND/TNDProgramsoffersHUDowned,single
familyhomesthatarelocatedinHUDdesignatedRevitalizationAreaswillbemadeavailabletoLaw
EnforcementOfficersandTeachersata50percentdiscountofthelastlistedprice.
WhenalawenforcementofficerorteacherchoosestouseanFHAinsuredmortgage.thedown
paymentis$100.Whenagovernmentalagencyofnonprofitorganizationisthepurchaser,HUD
expectsthatthefulldiscountwillbepassedontothelawenforcementofficerorteacher.
OfficerNextDoor/TeacherNextDoorprogramparticipantsarerequiredtoownandusetheir
property
as
their
sole
residence
for
at
least
three
(3)
years.
Participants
agree
to
execute
a
second
mortgageandnotewhichwillbefortheamountofthediscountwhichHUDcancallatalaterdateif
thebuyerfailstorecertify.Duringtheentireterm(3years),thebuyermayNOTownANYresidential
realpropertyotherthantheOND/TNDhome.Failuretocomplywiththis(oranyOND/TND)
requirementmayresultintheremainingbalanceofthesecondmortgagebecomingimmediatelydue
andpayable.
Theofficerorteachermustsubmitacontractbidof100percentofthelistingprice.Winningbidder
willbechosenbylottery.The50percentdiscountwillbeappliedatclosing.Teachersmustbe
8/7/2019 HUD Escrow Guide for Selling Agents and Buyers
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15
employedintheschooldistrictthattheypurchaseahomeinundertheTeacherNextDoorProgram.
PleasefindadditionalGNNDQ&Asat:http://www.hud.gov/offices/hsg/sfh/reo/goodn/gnndfaq.cfm
Moreinformationonthisprogramcanbefoundat:
http://www.hud.gov/offices/hsg/sfh/reo/goodn/gnndabot.cfm
Q3: WhatisFirefighter EmergencyMedicalTechnicianNextDoor?
EffectiveNovember1,2005,HUDannouncedtheeligibilityoffirefightersandemergencymedicaltechnicianstopurchaseBUDacquiredhomeslocatedinHUDdesignatedrevitalizationareasatadiscount,inaccordancewithHUDsregulationsfortheOfficer/TeacherNextDoor(OND/TND)Sales
Program.
InclusionintheOND/TNDprogramisdesignedtohelpmorefirefightersandemergencyresponders
becomehomeowners,andwillfurtherthegoalsoftheOND/TNDSalesProgramtoacceleratethe
revitalizationofAmericascitiesbypromotingtheintegrationofdedicatedrolemodelsandmentors
intothecommunity.Moreinformationcanbefoundat
http://www.hud.gov/offices/adm/hudclips/forms/files/9549c.pdf
Q4: DoesHUDhavespecialprogramsforNonProfitsandLocalGovernmentAgencies?
AnotheroneofHUDsSpecialSalesProgramundertheGoodNeighborInitiativesistheDirectSalesto
NonProfitOrganizationsandGovernmentAgencies.Thisspecialsalesprogramunderwhichapproved
nonprofitorganizationsandgovernmentagenciesmaypurchasepropertiesatdiscountedpricesforuse
inlocalhousingorhomelessprograms.Moreinformationonthisprogramcanbefoundat:
http://www.hud.gov/offices/hsg/sfh/reo/goodn/gnndabot.cfm
Q5: IsthereanythingelseIshouldknowaboutHUDHomes?
MoreinformationisavailableonHUDswebsite:
http://portal.hud.gov/hudportal/HUD?src=/topics/buying_a_home
Forexample,housesbuiltbefore1978mayhaveleadbasedpaintwhichcancauseharmtoyourfamily;
so
be
sure
to
read
about
this
hazard
and
about
what
you
would
need
to
do
to
correct
it.
Q6: Onwhatholidaysdoyoucloseyouroffice?
OurofficesareclosedonFederalHolidays.
Q7: WhatisFHAfinancing?
TherearethreemaintypesofFHAFinancing.Moreinformationmaybeobtainedfromanymortgage
companyfamiliarwithFHAGuidelinesforthevariousprograms.
(1)203(b)RegularFHALoan ListedasIN
IfthePropertydoesnothaveanymandatoryrepairsFHAwillinsuretheLoanhencetheclassificationof
IN
(2)203((b) RepairEscrow ListedasIE
Whenapropertyhaslessthan$5000inrepairstobringituptoMinimumPropertyStandards,
FHAwillinsuretheloanprovidedtherepairsarecompletedbytheBuyerortheBuyersagentwithin90
daysfromthedateofClosing.
ItisacosttotheBuyerthattheBuyercanfinanceandaddtheamounttothemortgage.
TheLendermonitorsandkeepsthefundsinanescrowaccountfordisbursementoncompletionof
repairstotheLenderssatisfaction.
Moreinformationavailableat: http://www.hud.gov/offices/hsg/sfh/ins/203bdf.cfm
8/7/2019 HUD Escrow Guide for Selling Agents and Buyers
16/17
16
(3)203(k) RehabLoan Listedas203K
Whenthepropertyhasmorethan$5000inMinimumPropertyStandardsrepairstobedone.
TheLendermustobtainanInspectionreportfromanapproved203(k)consultantandanewappraisal.
Moreinformationavailableat:http://www.hud.gov/offices/hsg/sfh/203k/203kmenu.cfm
Q8: Howistherepairescrowamountdetermined?
TheFHAappraiserliststheestimatedcostofrepairsneededtobringthepropertyuptominimum
FHAstandards.Thisamountisthenmultipliedby110%andthisamountislistedastherepairescrow
amount.Example:ifrepairstotal1,000.00x110%=1,100.00. TheRepairEscrowamountwillbe
listedat$1,100.00.
Q9: HowdoIdeterminethemortgageamountwhenthereisarepairescrow?
TheUnderwriterwilldeterminethefinal203(b)mortgageamount.TheDEUnderwriterwilltakeinto
accounttherepairescrowamounttodeterminetheFHAloanamount.TheDEunderwriterwill
determinethisamount.Regardlessofwhetherornotarepairescrowwillbeusedinthepurchaseof
ahome,thelinesontheSalesContractthatrequestthedownpaymentamountandthesecured
mortgage
amount
should
be
filled
in
TBD
(To
Be
Determined).
The
line
associated
with
the
length
oftheloanshouldalsobefilledinTBD.Pleaserememberthattherepairescrowamountneedstobe
filledinonlyifthebuyerisusing203(b)repairescrowfinancing.
Q10:WillHUDpayforanyclosingcostsandsellingagentscommission?
HUDpays3%RealEstateCommission.AlthoughHUDmaypayforthesecosts,keepinmindthatthe
higherclosingcostsandcommissionswillreduceyourNetProceedstoHUDwhichmayaffectyour
competitivebiddingratio. Formoreinformation,askyourrealestateagentorthelistingbroker.
Q12:Line5ontheHUDSalesContract:
HUD
will
allow
to
be
deducted
from
its
proceeds,
purchaser
financing
and
closing
costs
that
are
consideredtobereasonableandcustomaryinthejurisdictionwherethepropertyislocated. Inno
eventmaythesecostsexceed3%ofthepropertysgrosspurchaseprice.Pleasereferenceourescrow
instructionsforalistoftheclosingcoststhatmaybepaidbyHUD. Thecapsontheseallowable
expensesvarygeographicallyandbasedonprice.
8/7/2019 HUD Escrow Guide for Selling Agents and Buyers
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17
FYIPointofReferenceChartOverviewofaHUDHomeCycleAFORECLOSURETIMELINEOFEVENTS
(OR,12STEPSFROMREOTORENEWAL)
1)HomeOwner
oSomewhere,someonebuysahomewithFHAbackedfinancing(=FHAMortgageInsurance)
2)HomeownerTrouble MortgagePaymentsnotmade
oLoangoesintodefault
3)N.O.D. NoticeofDefault
o90daysNoticeofDefaultfiledwithCounty,deliveredtoowner
4)N.O.T. NoticeofTrusteeSale
o21daysNoticeofTrusteeSaleHouseissoldontheCourtHousesteps
5)TrusteeSale SaleofpropertyontheCourthousesteps
oThebankisthebuyer&newowner,ifnoonebidsmorethantheloanamountowed
6)LenderFilesMortgageInsuranceClaimwithMortgageInsuranceCompany
oTheBank/Lenderfilesaninsuranceclaimwiththeloansmortgageinsurancecompany
7)MortgageInsuranceClaimisPAIDbyMortgageInsuranceMICompany,inthiscaseFHA(takesdaystoweeks)
oTheClaimisPaidoThismeansthattheloanispaidoffbyMICompany(FHA) oThentheMICompany(FHA)becomestheOwner. oWhenitsanFHAbackedloan,HUDbecomestheOwner.
8)NewOwner FHA/HUDbecomethenewOwner,
oWhomustthenmustliquidatetheproperty oTheFHAinsurancefundisoutthemoneynowandneedstosellthesehousestorepaytheFHA
insurancefund.
9) FHAhiresanFSM& AM FieldServiceManagerandanAssetManagement
oTheFSMpreparesthepropertyforsaleandmaintainsitthroughthecloseofescrow
10)AMtakesoverthepropertyuntilsold.
oTheAMsellsthepropertythroughtheirnetworkofLocalListingBrokersoBuyergoesHouseshoppingandsubmitsofferthatisaccepted
11)ClosingAgentOpensandClosesEscrow(3060Days)
oOnceSOLD,escrowreceivesacompletedContractPackage&EMDfromAMoExecutescontract,transfersownership,closestheescrowandgetsthemoneybackintotheUS
Treasury
12)NewOwnerThisisyou,theBuyer. Congratulations!
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