HUD Escrow Guide for Selling Agents and Buyers

8/7/2019 HUD Escrow Guide for Selling Agents and Buyers

1/17

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2/17

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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


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4/17

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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:[email protected]


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ESCROWEVENTSTIMELINE &WhatCouldGoWrong? (WCGW?)

1STHALFOFTHEESCROW(TheBeginningoftheEscrow=Easy)

1)SignedContractReceivedFromAM (Day 0)

2)EscrowisOpened,PutOnlineandWelcomeNoticesaresenttoBuyerandtheirAgent

3)EarnestMoneyDepositReceivedWiththeContract.Opentitleorder.

*WCGW? Buyerwantstocancelforvariousreasons

PreliminaryTitleReportarrives,showingownertobeformerlender&notHUD

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.


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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


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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.


BLB:

https://www.blbresources.com/


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:


BLB: https://www.blbresources.com/


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


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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


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(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.


17/17

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!