Attention California, Hawaii & Guam Home Buyers - “Relief in Real Estate”

Revised 01/03/2008

FAQ’s

1. Are all properties eligible for these incentives?

A. No, only properties advertised to the general public with a list date of January 4, 2008, or later, are eligible for these incentives. Any property identified with a list date prior to January 4, 2008 will not be eligible for these incentives. Properties advertised through HUD’s Good Neighbor Next Door programs are NOT eligible for these incentives.

2. I submitted a bid and was awarded the property on January 4, 2008. Do any of these incentives apply?

A. No. Properties currently under contract and any properties awarded on, or prior to January 4, 2008 are not eligible for any of these incentives.

3. Are any of these incentives available to investor buyers?

A. No. All of the incentives being offered at this time are available for owner occupant buyers only.

4. Are any of these incentives available to nonprofits?

A. No. Nonprofit organizations have established discounts that are already in place. These sales incentives are not available for use by nonprofits.

5. Will the use of any of these incentives impact the net sales price?

A. No. Using one or more of these incentives has no bearing on the calculation of the net sales price.

6. How do I indicate that my buyer wants to take advantage of one or more of these incentives?

A. A Sales Incentive Addendum has been developed. Simply have the buyer identify the incentive(s) that they would like to take advantage of on this addendum. This addendum must be signed by the buyer(s) and the selling broker and be submitted along with the other required contract documentation if the buyer(s) want to take advantage of any of these incentives.

7. Is there anything on the contract that should be marked to indicate that my buyer(s) want to take advantage of the $100 down payment incentive?

A. Enter $100 as the down payment amount on line 4 of the contract. The mortgage amount and the length of the mortgage can be filled in with TBD. Also, be sure to include a copy of the Sales Incentive Addendum with the contract package. The addendum should indicate that the buyer(s) want to take advantage of this incentive.

8. Is there anything on the contract that should be marked to indicate that my buyer(s) want to take advantage of the $1,000 sales allowance?

A. No. Simply identify on the Sales Incentive Addendum that the buyer(s) is entitled to this incentive. Our office will determine whether or not this incentive applies and you will be informed of our decision on the Notice of Contract Acceptance. We will notify the closing agent of our decision at the same time and the incentive will be displayed on the HUD1 statement.

9. What can the $1,000 sales allowance be used for?

A. If this incentive is applicable, this money can be used in just about any manner the buyer chooses. Some options include buying down a loan rate, or receiving the sales allowance in the form of a check that will be issued by HUD’s closing agent to the buyer(s) at the close of escrow. Buyers should check with their lenders for any restrictions the lender may wish to impose regarding the use of the sales allowance.

10. Is there anything the $1,000 sales allowance cannot be used for?

A. The $1,000 sales allowance CANNOT be used as the earnest money deposit. The $1,000 sales allowance CANNOT be used as additional money from HUD toward paying closing costs or the selling broker commission. Consistent with current policy, HUD will pay up to three percent (3%) of the buyer’s closing costs and up to five percent (5%) of the selling broker commission if these costs are itemized on the purchase contract.

11. How will the $1,000 sales allowance be distributed to the buyer(s)?

A. Regardless of how the money is utilized by the buyer, the allocation of the sales allowance will be displayed on the HUD1 statement.

12. Is there anything on the contract that should be marked to indicate that the broker is entitled to the extra $500 selling bonus?

A. No. Simply identify on the Sales Incentive Addendum that the broker is entitled to this incentive. Our office will determine whether or not this incentive applies and you will be informed of our decision on the Notice of Contract Acceptance. We will notify the closing agent of our decision at the same time and the incentive will be displayed on the HUD1 statement. 13. Can my buyer(s) take advantage of more than one incentive?

A. Yes. Depending on whether or not a full price offer is being submitted, the buyer(s) may be entitled to more than one incentive.

14. Does the type of financing impact whether or not my buyer(s) can take advantage of any of these incentives?

A. Yes. The $100 down payment incentive is available only to owner occupant buyers that choose to use FHA financing to purchase their home. However, the type of financing used by the buyer(s) is not a consideration for the $1,000 sales allowance; or the additional $500 selling broker bonus. Please be aware that the $1,000 sales allowance incentive is available only to owner occupant buyers that purchase properties with a full price offer.

15. Can you please define what a full price offer means?

A. All properties are listed with 2 values, an appraised value (identified as the AS-IS value) and a list price (identified as Price). There are several instances where the list price is less than the as-is value. Offers submitted at 100% (or more) of the list price will be considered full price offers; even if the list price is less than the as-is value.

16. If my buyer uses 203(k) financing to purchase a home, do any of the incentives apply?

A. Yes. Depending on the amount of the offer, it is possible that all 3 incentives could apply. Please be aware that this financing option is not available for all properties. The 203(k) program may be used only on properties listed Uninsurable (UI). However, FHA also offers a financing option designated 203(k) streamline. 203(k) streamline financing can be used on properties listed Insured (IN) or Insured with Escrow (IE). Again, depending on the amount of the offer, all 3 incentives may apply if the buyer chooses to use 203(k) streamline financing.

17. My buyers won the bid, but bid more than the appraised value to ensure that they would win. Can they still buy the home for $100 down?

A. No. FHA guidelines require that the buyers still have to bring in the “overbid amount” in the form of cash to the closing table.

18. My buyers were awarded a bid on an eligible property and started out using conventional financing. They would now like to switch over to FHA financing. Do the incentives apply?

A. Yes. So long as the property meets the eligibility requirements for the incentives, buyers can change financing and still take advantage one or more of these incentives.

19. How long will these incentive programs last?

A. At this time, HUD has not published the length that these incentive programs will be in effect.