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March 19th, 2010 8:48 AM by David W. Welch
The name of my blog is www.RealEstateOptimist.com, but I may need to change it to BankingPessimist.com or something like that. Did you ever learn a new game when you were a kid, and it seemed like the person teaching you the rules was making them up (in their favor) as they went along? I think that kid grew up and is now running HUD and Fannie Mae and Freddie Mac and the bank. I will give you just one of the most recent examples I am trying to work through right now.
The Neighborhood Stabilization Program (NSP) is an initiative by the federal government to help areas hit especially hard by foreclosures. The program was funded with $200 billion dollars available to local communities, and required a plan to be submitted detailing how the funds would be used. Here in Florida there are already county level down payment assistance programs in place. The state worked with the counties to use the existing system to administer the program. In my opinion that was a very smart decision, and I would like to thank our state and county governments for doing the right thing. The funds are available in the form of down payment and closing cost assistance to qualified buyers. Because the program is designed to help areas with high foreclosure rates, the money can only be used to purchase foreclosed properties.
I submitted an offer on a bank owned property with the contingency of the buyer receiving the NSP funds. The buyer is pre-approved for an FHA loan, and using a lender that is not only very experienced in down payment assistance; she teaches the class for the county. We did not make a low offer or ask for closing cost concessions, since the home is priced fairly and the NSP funds will cover the down payment and closing costs. The bank has come back and said they cannot review the offer without proof the NSP funds are available for the buyer. NSP cannot set the funds aside and designate them for the buyer without a contract. Conveniently, there are other offers on the property, and we are in a Catch-22. Is this actually the bank's policy or is the asset manager or agent mistaken? The lender has used NSP funds with this bank before, so they should know the rules. Or, are they making them up as they go along (in their favor)?
Orlando Real Estate, David Welch Real Estate Optimist