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June 11th, 2010 8:24 AM by David W. Welch
The neighborhood stabilization program "NSP" is a $200 billion program set up by the federal government to target the areas hardest hit by foreclosures. The funds were apportioned by state, and here in Florida the counties had to present a plan on how the monies would be used. Orange County already has a down payment assistance program, and the funds are administered like the existing program. I have been working with someone that has been approved for the assistance, and we have made several offers contingent upon receiving these funds. A key point of this program is that the funds can only be used to purchase a foreclosed property.
One bank, Deutsche Bank said they would not even consider his offer, because of the NSP contingency. This one was quite frustrating, because the funds can only be used to purchase a foreclosed property, but the bank will not accept offers using these funds. What a "Catch-22". Speaking with another REO agent, I learned that other banks felt the same way. She said that the only properties that sold with NSP funds were the ones that they had a hard time selling. That usually means there is either something wrong with the property or it is priced too high. Either way, who is going to want a property like that, and how are you going to get it financed? It seems to me that at least Fannie and Freddie should give an NSP buyer a break, but we were shot down by them too. Another listing agent said they are seeing frustrated buyers making ridiculously high offers just to get a home under contract. The band sees a higher "net" to them, and accepts the too high offer. Of course, later the deal falls apart for appraisal issues. Who does that help?
It may have helped us, because we finally got an offer approved using the NSP funds on a Fannie Mae property. We saw it before, but it was under contract before we could even submit an offer. That deal fell apart (I don't really know why, but I am guessing financing), and we jumped on it. It was off the market for a while with that last contract, so I guess it appears to be hard to sell. It appears to have a newer roof, and the flooring and fixtures are all new too. The price seems right too. I will try to get this one finalized as quickly as possible.
David Welch Real Estate Optimist, Orlando Real Estate