March 18th, 2009 by Michael Oliver

I think Phoenix Arizona is offering a perfect (well maybe not “perfect” but a very good plan) incentive to get (or help) buyers decide to make a home purchase specifically pertaining to lowering the amount of foreclosure inventories within the city limits. Basically what the $15,000 “grant” or incentive states is this: Buy a foreclosure home in the Phoenix city limits and the city will “grant” you up to $15,000 for your down payment. Here’s actually the more specific details provided from

http://arizonarealestatehome.com

As part of the Housing and Economic Recovery Act (HERA), passed by Congress in July 2008, $3.92 billion was provided to communities hardest hit by residential foreclosures and mortgage delinquencies. The city of Phoenix received $39,478,000 in Neighborhood Stabilization Program

(NSP) funds to help families purchase foreclosed homes at a discount, which in turn helps stabilize neighborhoods. NSP Homeownership Assistance funds are for down payment and closing cost assistance for eligible homebuyers.

Homeownership Assistance Description

The NSP Homeownership Assistance Program provides a $15,000 loan for down payment and closing cost assistance for buyers of foreclosed homes anywhere in the city of Phoenix. The full amount of the loan is paid back to the city when the homebuyer sells the home or refinances. The program targets foreclosed single family homes, townhouses and condominiums (condo conversions are not eligible) that meet HUD Housing Quality Standards (HSQ). The Homeownership Assistance program is for down payment and closing cost assistance only and cannot be used to fund rehabilitation activities.

Eligible Homebuyer

Eligible families can earn up to 120 percent of area median income (AMI), which is based on family size. In determining a family’s income, all wages and salaries of all family members over age 18 are considered as well as other sources of income.

Family Size 120% AMI Income

1 $53,950

2 $61,650

3 $69,350

4 $77,050

5 $83,200

6 $89,400

7 $95,550

8 $101,700

Families must be FHA creditworthy and have completed the NSP-required eight-hour Homeownership Education and Credit Assessment counseling. Families must maintain the property as their principal residence.

Eligible Property

To be eligible for NSP Homeownership Assistance funds, properties must meet the following requirements:

Located in the city of Phoenix

Foreclosed and have changed title

Appraised within 60 days of the purchase contract

Purchase contract must contain four contingencies:

Sales price at least 15 percent below appraised value

Property clear of the city’s top eight neighborhood code violations (see phoenix.gov/CLEANPHXltopseng.pdf)

Pass inspection according to HQS before close of escrow

Signed “Lead Disclosure Form” from seller for properties built pre-Jan. l, 1978

Program Description

The NSP Homeownership Assistance program consists of three-phases – each with very specific requirements:

Home buyer Education and Credit Assessment

Complete eight hours of counseling from a HUD-certified housing counselor

Receive a Certificate of Completion from the HUD-certified counselor

Qualify for a 30 year, fixed rate, amortizing loan (not subprime)

Eligibility Verification

Determine income eligibility and invest $1,000 from own funds
Find eligible bank.-owned foreclosed property

Verify purchase price of at least 15 percent below appraised value

Closing Requirements

Sign purchase contract with city required contingencies (see above)

Pass Housing Quality Standards (HQS) inspection before close of escrow

Completed HUD environmental impact assessment (provided by the city)

Lead Disclosure Form signed by seller if property pre-Jan. 1, 1978

Obtain three-year Home Warranty contract, not to exceed $1,500

Execute city Homeownership Assistance loan documents/agreements