All of us are aware of the overwhelming abundance of bank-owned properties flooding the Phoenix area housing market. The Arizona Department of Housing (ADOH) has developed a new program to help your clients purchase foreclosed properties in Arizona. The "Your Way Home AZ" program offers a forgivable, zero-percent-interest loan of 22% of the home's purchase price to qualified borrowers purchasing an eligible foreclosed home. This significantly increases your clients' purchasing power, since eligible borrowers only need to qualify for 75% of the purchase price. The program is currently available throughout all of Arizona.
It is advantageous for you as Realtors to be aware of the program requirements, as well as the unique benefits available to their clients. Click Here for a detailed listing of eligibility requirements for borrowers and properties, as well as financing terms and guidelines.
When working with clients that are interested in utilizing this program, there are a few additional steps that need to be taken throughout the purchase process. Initially the buyer will need to be pre-qualified by a lender as usual. The buyer would need to obtain from the lender a few items, such as a Loan Status Report indicating the maximum mortgage amount that the applicant qualifies, an AUS Approval, and a Program Eligibility Letter.
The homebuyers will also need to participate in an eight-hour homebuyer counseling program. The Homebuyer Agency will issue a certificate to the buyer upon completion. This can be completed while they are searching for a property. The program website, www.yourwayhomeaz.com, provides a feature that enables you to search for eligible foreclosed properties by county or city.
Once you have located a property and are ready to place an offer, Realtors are required to include appropriate language within the purchase contract. Failure to ratify the purchase contract can result in disqualification from the program. The following is a list of some desired contingencies and conditions to be included within the offer:
1. Qualifying and obtaining a first mortgage in the necessary amount
2. Qualifying and obtaining a second mortgage from the Your Way Home AZ Program
3. Appraised value of the property must be sufficient to ensure that the purchase price is no more than 99% of the current market value
4. Seller must provide the program's Certificate of Seller to the buyer with the seller's acceptance of offer
5. Property must meet Minimum Property Standards
6. Property needs to be eligible for a home warranty policy
7. Closing date should be at least 45 days after acceptance to allow enough time to process application and meet all program requirements
The sellers are also required to provide a Seller's Certificate indicating that the sales price represents a discount of at least 1% below the appraised market value.
The Homebuyer Agency will then set up a file for your client to be submitted to the ADOH requesting that program funds be reserved for the applicant. Upon approval from the program, the ADOH will then issue a Commitment reserving the funds. The transaction is then ready to proceed in the customary fashion.
Please contact the Krushinsky Team at 602-695-7575 or david.krushinsky@wjbradley.com to answer any questions or to find out if your clients are eligible to qualify for this incentive when looking to purchase a home in Phoenix or surrounding areas.
Here's the latest update on the Your Way Home Program. Per Reginald Givens at Arizona Department of Housing, there has been 60+ deals funded with another 150 under obligation. They have a total of $20 million to use for this program and anticipate being able to fund about 500-550 deals. They anticipate the program lasting for another 12 months.
Things to be careful of are:
There is a process to follow listed on the website and it's critical to follow those steps in order for a successful transaction. Good luck!
I personally know persons that have had home sales fall out of escrow because they tried to use this program. Slow, burried in paperwork, no communications, these are just some of the problems they have encountered. Also banks are either refusing to accept offers that use this program or will not extend deadlines because of the time involved in processing a loan through this program. The program is not working in some counties from my perspective and that of many realtors. Afterall, the whole purpose of the program was to stimulate sales of forclosed homes. It appears to only have created jobs for a few people and they are doing a terrible job at best of administering the program.
AZHomeHunter, I would agree that this program is not going to be an ideal transaction. The administrators of the program are employed by the State of Arizona. Have you been down to the Department of Motor Vehicles lately? I think it's safe to say that one can't expect "world-class" service, but the one thing they have done is document a complete process. When the process is followed the transaction will take 45-60 days to close after everything is accepted.
In my opinion, the benefit to the buyers outweigh the negatives. This program is a niche program and won't help everyone rather lower income buyers that actually need the help. Over the years, I have worked with lenders that are actually trying to get more loans from me, that provide horrible service. Just remember the "golden rule", be patient and courteous and they will take care of you.
Thanks David. We are trying to be patient but get discouraged when banks tell us up front that they will not work with the program.
We still think the program is a good one and will try to utilize it.
I sent in all necessary paper work to the your way home AZ program three days before I was scheduled to close they told me they ran out of money. David your comment about the DMV was spot on there are several different agencies offering the funding I worked with Kelly Roberts from NHS. What a joke it was like trying to get in touch with the president.
P.S. I'm out on the street in one week. THANKS YOUR WAY HOME AND THANK YOU KELLY ROBERTS FOR ALL YOUR HELP!
I would be frustrated too! That totally sucks.