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Selling a Foreclosed Property?

If your client is purchasing a foreclosed property, he or she may be eligible for downpayment and closing cost assistance. The 5-year, 0% interest deferred loans are up to $14,900 for eligible properties and borrowers. The loans may be forgiven for 20% per year for each full year the borrower owns and lives in the property. At the end of 60 months (or at the time of sale, refinance, or non-owner occupancy), the borrower must be current on the mortgage to qualify for forgiveness of the loan.

The loan is to be used in conjunction with the North Carolina Housing Finance Agency’s FirstHome Mortgage. The funds are from a $4.2 million grant the Agency received from the state’s Division of Community Assistance through the Neighborhood Stabilization Program (NSP). The Agency was one of 20 organizations to receive grant funds, which are to be used to mitigate the number of foreclosed, vacant and blighted homes in 23 North Carolina counties.

Who is eligible?

To qualify for the NSP loan, your client must be a first-time home buyer according to our FirstHome Mortgage program guidelines. Buyers cannot have owned a home and occupied it as your principal residence in the past three years, although they may qualify if they are eligible for a special one-time Veteran’s exception.

You must meet the certain income limits. Maximum qualifying income limits vary by county and household size and range from $41,900 for a 1-person household to $86,000 for a 4-person household. All borrowers receiving NSP funds must obtain 8 hours of classroom home buyer counseling from a HUD-approved housing counselor prior to loan closing. 

What properties are eligible?

The homes must be foreclosed and for sale by a bank, bank holding company, government agency, or authorized REO designated entity. Our Agency REOs are not eligible. Only single-family homes, condominiums, and townhomes qualify. Manufactured homes are not eligible.

The property must have no structural repairs or deferred maintenance issues, per the home inspection. All repairs must be made prior to loan closing. The Agency cannot escrow or advance NSP funds.

Sales prices cannot exceed $210,000. In addition, all properties must be purchased at least 1% below the appraised value, with the appraisal dated within 60 days of the sales contract.

The home also must be located in one of the 23 counties served by the NSP grant: Alamance, Brunswick, Buncombe, Cabarrus, Catawba, Cumberland, Dare, Davidson, Durham, Edgecombe, Forsyth, Gaston, Guilford, Iredell, Johnston, Mecklenburg, New Hanover, Pitt, Randolph, Rowan, Union, Vance, and Wake. You must occupy the home within 60 days of closing.

How Do I Begin?

Since the NSP loan must be used in conjunction with the Agency’s FirstHome Mortgage, you must first determine if your client qualifies for the mortgage. Contact one of the Agency’s participating lenders in your area to learn how a FirstHome Mortgage and NSP loan could help your client purchase a foreclosure property.

For more information about the NSP program, contact Rob Rusczak at rob@nchfa.com or (919) 875-3777.