Tuesday, January 31, 2012
From the January/February issue
Navigating the Orange County
Neighborhood Stabilization Program
By Doreen Hargreaves
The Neighborhood Stabilization Program is a federal initiative designed to stabilize neighborhoods that are negatively impacted by foreclosures, but this downpayment assistance program is also a tremendous benefit to homebuyers. The programs are administered on the local level — to date, the Orange County Neighborhood Stabilization Program has purchased 160 foreclosed homes; sold 58 renovated homes under Option A; and assisted 146 buyers under Option B.
City of Orlando
Neighborhood Stabilization Program
The City of Orlando’s NSP has buyer eligibility guidelines that are similar to those of Orange County’s NSP. Under the city’s program, a buyer can benefit from up to 40 percent of the purchase price when purchasing a renovated NSP home. A buyer needs only to meet the moderate income requirement, and the downpayment assistance is based on the housing ratio. The funds received can be allocated to downpayment and/or to closing cost. And, if a buyer does not qualify for full 40 percent, the City of Orlando will assist with 3.5 percent downpayment and closing costs on their NSP homes.
The Orange County NSP can give a qualified homebuyer a real edge when submitting an offer on an REO sale. Buyers that are qualified for NSP downpayment assistance are often looked at first for REO sales or HUD-owned properties. Program participants have a choice of purchasing a renovated single-family home directly from Orange County (Option A) or purchasing a foreclosure home in one of the county’s five target areas (Option B). Either way a buyer may qualify for $10,000 to $20,000 in assistance plus additional funds for closing costs.
Eligibility criteria for NSP participation is based on income, assets, and family size. Other criteria include:
- A legal right to reside in the U.S.;
- Not currently a homeowner (no investors);
- A 620 minimum credit score;
- Two years of satisfactory credit;
- Two years elapsed from bankruptcy;
- Ability to contribute 1.75 percent of the purchase price to the downpayment (cannot be a gift);
- Ability to provide 3.5 percent FHA downpayment for Option A transactions (1.75 percent can be a gift); and
- Documented completion of a homebuyer education program.
In addition, the sales price of the home cannot exceed $219,000 and the Option B homes must appraise 1 percent higher than the sales price.
Orange County NSP Option A
Homebuyers have the opportunity to purchase a renovated, foreclosed single family home from Orange County under the program's Option A. These homes are move-in ready, and can be found in MLXchange and on the Orange County NSP website. A REALTOR® is needed to assist with the sale, especially to coordinate the contract between the buyer and Orange County.
Orange County NSP Option B
Under Option B, a buyer can purchase a single-family, foreclosed home in one of five targeted areas in Orange County. Under the Federal Register Notice a home in any of these areas with a payment delinquency of 60-day status or a tax delinquency of 90-day status meets the NSP foreclosed requirement. The property must be vacant or owner-occupied, and will follow the tenant protection requirement (i.e., if the property is a currently a rental the county will not displace the tenant and will not provide a buyer with assistance on a home that is a rental property). Homebuyers can also utilize an FHA 203K to accommodate needed repairs on a purchase. (Keep in mind that Purchase Price + Repair Cost = Appraised Value + 1 Percent of Sales Price).
Orange County’s Option B target areas (Meadow Woods, Pine Hills, Azalea Park, Holden Heights/Oak Ridge, Union Park) are a starting point. For instance the Meadow Woods area crosses over into the South Chase area and ends over in Hunter’s Creek community, so you may be pleasantly surprised to find qualifying homes in these neighborhoods. It’s not that these neighborhoods are run down — they simply are in an area with a high concentration of foreclosures. (You can confirm the boundaries of a target area via the Info Map GLS function on the Orange County website.)
This year I helped a single mother secure financing and downpayment assistance from the NSP program. She purchased an Option A home from Orange County for $100,000 and received $20,800 in assistance. This new homeowner’s monthly mortgage payment is only $9 higher than the $650 she was paying in rent.
Doreen Hargreaves, Fidelity Funding Mortgage Corp., Orlando, serves on the ORRA Board of Directors as its affiliate director. She can be reached at email@example.com.