Neighborhood Gold Program

Neighborhood Gold Program

The Neighborhood Gold Program:
Neighborhood Gold's program provides a unique opportunity to buyers, sellers, agents and lenders. Let us deal with what it is and what it is not and how it makes sense to implement into a transaction.

What It Is Not:

Not affiliated with any government agency.
Not for buyers who have the cash and are willing to put down 20% or more
Not for sellers who are unwilling to take less then the appraised value of their home.
Not for agents or lenders who are unwilling to use creative financing.
Not affiliated with any government agency.
Not for buyers who have the cash and are willing to put down 20% or more.
Not for sellers who are unwilling to take less then the appraised value of their home, and are not affiliated with any government agency.

What It Is:

A program that can be used with FHA, Conventional and Sub-prime loans.
There are over 2,500 lenders nationally that accept this program.
This is a non-repayable gift to the buyer without an obligation to pay back.
Down Payment Assistance (DPA) that is provided by a non-profit organization to help all parties involved in the transaction.
Provides buyer with alternative for more favorable financing when used.
A strong marketing tool to attract more buyers to a property for sellers.

How Does It Work:

This program is very simple. The best way to understand how it works is that the buyer is given immediate equity in the property that is being purchased.

This is provided to the buyer with a grant / gift which is used for down payment, and/or closing costs. The grant / gift comes directly from a nonprofit organization, The Buyers Fund, Inc., who has an on-going pool of funds to consummate thousands of these transactions monthly.

These ongoing sources of funds are replenished at the close of escrow where the seller donates a portion of his equity in their property from the proceeds of the sale just like a agent and the seller pays all other parties. Let us look at the example a little closer: .

Example of How This Program Can Work for You.

Neighborhood Gold Program
Purchase equity!

Listing Price and Appraised Price of a Property:
Lets say that the Listed Price and the Appraised price of the property were one in the same.

Seller Bottom Line or Negotiated Price Before Expenses:
(Here you want to refer to the information located below regarding IDEAL PROPERTIES FOR DPA -- but basically, the amount is listed to the right.

The Difference between Appraised and Sellers Bottom Line:
What's the difference between the two values.

$300,000.00

$290,000.00

$10,000.00

The buyer must qualify for a mortgage,
The property must appraise for the sales price,
The seller must be willing to participate by donating a portion of his equity to a nonprofit organization, The Buyer's Fund, Inc.
The agent / lender must have received the proper training in order to assist in helping their clients achieve their goals.

There are no credit score minimums, income limits, liens placed on the property, first time buyer requirements, length of time to live in the property, or geographical restrictions placed on the buyer to qualify for a grant. The grant funds can be used for owner occupied or non-owner occupied properties.

Necessary Steps in the Transaction:
1. A Purchase Agreement is made up where the sales price of the property is $300,000.00. The seller agrees to participate in this transaction with a portion of his equity. The verbiage that is included into the agreement should read something like this: 'The seller agrees to pay a service fee to THE BUYER'S FUND, INC. in the amount of $10,000.00, to be paid at the close of escrow."

2. The lender submits a one-page grant application to The Buyers Fund, Inc. this can be done online or faxed to (619) 255-7442. This application has been simplified where signatures are NOT required from the buyer or seller.

3. Upon receipt of the grant application, within a couple of business hours, a confirming gift letter is faxed back to the lender and a copy also goes to the buyer. This confirmation letter becomes a part of the loan file package.

4. A couple days before the close of escrow, Neighborhood Gold personnel contact the escrow company and inform them of wiring instructions. Upon acknowledgment from the escrow company, the funds in this example of $9,000.00 for the down payment are wired by The Buyer's Fund, Inc., to the escrow company.

5. At the close of escrow two things happen; first, the buyer is enrolled into the Mortgage Payment Protection program in the event of an involuntary loss of job. They are protected for ONE-FULL YEAR from the date of closing. This protection provides up to SIX-MONTHS of payments (maximum of $1,500.00 per month) after a two-month vesting period. The second, from the seller proceeds, $10,000.00 is worried back to The Buyer's Fund, Inc., thus replenishing the pool of funds to allow future funding of other transactions.

1. Vacant Property:
When you find a vacant property, chances are someone has moved for a reason. They could be in financial trouble or be making more than one payment on a property. These types of properties are great to use DPA to help sell.

2. Price Reduction:
The question that must be asked is why the price reduction? Chances are the seller is eager to sell the home and have reduced the price for a faster sale. When a seller offers DPA as an alternative rather than reduce the price, it opens up all kinds of possibilities to sell their home and increase their pool of potential buyers.

3. Motivated Seller:
When a homeowner decides to sell their property they often want it to happen quickly. It is easy to increase your pool of buyers by offering DPA. With neighborhood Gold's national presence and thousands of successful transactions our experience tells us when DPA is offered on a property, it virtually eliminates stressful negotiations.

4. Listing Longer than 30 Days:
The key is to sell the property in the shortage amount of time at the highest possible price for the seller. When a property goes beyond 30 days some kind of marketing stimulus may be necessary to cultivate interest in the property. DPA is a creative solution.

5. Location or Cosmetic Problem:
If a property is located on a busy street, cabinets need to be updated and/or flooring need to be replaced, DPA is the answer. Buyers can preserve cash for improvements or make the property more desirable to the buyer DPA.

6. Seller is Offering Incentives:
Buyers are looking for reasons to buy and meaningful incentives are popular closing tools for any property. Offering DPA is a perfect solution for the seller. A non-repayment grant to the buyer is one of the most powerful incentives that can be offered.

7. Value of Range Properties:
This concept for pricing of homes is ideal for DPA. With the higher range of the value placed on the property and with a grant also included, as an incentive to the potential buyer, the pool of buyers will be increased significantly. Neighborhood Gold also provides rider signs that say "DOWN PAYMENT GRANT AVAILABLE" that stimulates interest and phone calls on the property.

Involuntary Unemployment Insurance
In addition to the contributions listed above, we also focus our charitable-giving efforts by helping people not only purchase a home but stay in it during times of financial difficulty. With this insurance, homeowners can continue to pay their monthly mortgage payments in the event of an unforeseen job loss.

To date, we have contributed over $1,073,768.00 to help pay for the cost of unemployment insurance for homeowners who use the Neighborhood Gold down payment assistance program.

Q HOW MUCH DOES IT COST FOR THE NEIGHBORHOOD GOLD MORTGAGE PAYMENT PROTECTION?

A There is no cost for this significant protection benefit. This payment protection plan protects both the homebuyer and the lender, ensuring that mortgage payments for at least six months will be made to the lender if the primary borrower involuntarily loses his or her job during the first year of the loan.

A Any FHA, Conventional, or Sub-Prime loan that allows a gift from a nonprofit organization can use the program, provided that the agent / lender has had proper training and is able to assist in the functionality's of this program.

Q DOESN'T THIS PROGRAM SIMPLY MEAN THE PRICE OF A HOME IS RAISED TO COVER THE FUNDS?

A No. An independent appraiser substantiates the market value of the home being purchased using our grant. The appraiser must substantiate the value of the home based on sales of comparable properties. The price of a home cannot be higher than it's appraised value.

A No. The grant comes from an existing pool of funds operated by the Buyer's Fund, Inc. After closing, the seller pays a service fee that replenishes the fund for the next buyer.

A FHA does not approve any down payment grant programs; it is the responsibility of lenders to ensure that down payment assistance programs meet official guidelines. In HUD Mortgagee Letter 00-8, dated March 3rd, 2000, signed by William C. Apgar, Assistant Secretary for Housing-Federal Housing Commissioner, it states:

"Their has been widespread confusion regarding the Department's role in approving DOWN PAYMENT ASSISTANCE programs in the form of gifts. FHA does not approve DOWN PAYMENT ASSISTANCE programs in the form of gifts administered by charitable organizations. Mortgage Lenders are responsible for assuring that the gift to the homebuyer from the charitable organization meets the instructions described in HUD Handbook 4155.1, REV-4, Change 1 (e.g. no repayment implied, etc.). Thus, while FHA will issue approval letters to nonprofit agencies for their participation as mortgagors, providers of secondary financing and as purchasers of HUD homes at a discount, such letters are not to be construed as approval of the nonprofit agency's DOWN PAYMENT ASSISTANT GIFT programs. FHA will not issue approval letters for down payment assistance gift programs."

A There are no income limits. If a buyer is approved for a loan, they can receive the grant funds.

A No. Many sellers consider this program an extremely effective way to increase the pool of potential buyers for their home and to sell their home faster. Additionally, neither FHA nor Conventional organizations considers it a sales concession. FHA allows 6% of the sales price still to pay for closing costs, prepaid, and 2-1 buy-downs. Conventional allows the seller to pay 3% of the sales price towards closing costsw and/or 2-1 buy-down.

A The only fee involved is a service fee paid by the seller, this fee is the GRANT AMOUNT PLUS $1,000.00 OR 10% of the FUNDED AMOUNT to the BUYER. Example, if the grant amount is below $10,000.00 the fee is $1,000.00 in the case of a $15,000.00 grant to the buyer, the service fee is $1,500.00 = $16,500.00.

Q IF THE HOMEBUYER DOES NOT QUALIFY FOR MORTGAGE PAYMENT PROTECTION, CAN THE HOMEBUYER STILL RECEIVE A GRANT?

A Absolutely. The Mortgage Payment Protection is a benefit, but not a required part of the grant application.

A There are two tax deductions to consider: (1) A deduction against capital gains and (2) a charitable deduction. This grant can be a deduction against capital gains. Capital gains are taxed on a primary residence if the gain is 500k or more. Capital gains are always taxed against investment properties. The fee to the seller can reduce their capital gain, as does a fee to a agent or title company. If a taxable capital gain occurs with the sale of an investment property, then our fee can be deducted as a cost of sale, in the same manner as an agents commission or closing costs are. The seller service fee does not qualify for a charitable contribution because the seller is receiving a service in return for the donation, and under IRS rules, the donor may not receive services or goods in return. However, we would encourage you to verify any tax related questions or concerns with your tax accountant, we are not professionals in this realm or able to give any legal advice in this matter.

A Neighborhood Gold is located in Provo, Utah and has provided down payment grants in virtually every state and have representatives throughout the entire United States. Our please be sure to contact someone who is familiar with this process and can best represent you and your needs in this matter.

A The loan officer completes the application and submits it to The Buyer's Fund, Inc, for approval. Once approved, a gift letter confirming approval of the funds is sent from The Buyer's Fund, Inc., to the lender. Homebuilders, homebuyers, or sellers who are interested in participating in the program should work closely with their loan officers to take full advantage of this program.

A Yes, we have several brochures available in both English and Spanish that can be used to market to agents, builders, prospective homebuyers, and others who can benefit from using our program. We are also working on additional information for both lenders and agents that explains the benefits of the Neighborhood Gold and it's program even more completely.

A Typically it can take weeks or even months to sell a home. Most sellers are anxious to sell their home, and they often reduce their price significantly and make other concessions in the process of making a sale. The program allows a seller to substantially increase the pool of potential hombuyers interested in the buying of his or her home from the very beginning. This often means a sale will be made more quickly and, most likely, for the full sales price -- all benefits that are well worth the seller participating in the Neighborhood Gold program.

A We have a list of lenders across the country that accepts our program on FHA, Conventional, and Sub-Prime financing. Many lenders do not have "approval process" and therefore, are not reflected on our list.

Q DOES A BUYER HAVE TO REPAY THE FUNDS RECEIVED THROUGH THE DOWN PAYMENT ASSISTANCE PROGRAM?

A No. This is a grant, a bona-fide gift that the buyer does not have to repay. The grant is given when the seller agrees to participate in the program by reimbursing the grant amount, plus a service fee, after closing.

Q CAN FUNDS FROM THE PROGRAM BE USED TO PURCHASE CONDOS, APARTMENTS, DUPLEXES, ETC.,?

A The funds from the Neighbored Gold program can be used to purchase any property, provided that the buyer qualifies for the type of loan and has approval status.

A You need to be straight forward and keep it ver simple. Have them visit this site for more information on how they can get involved.