Redfin to Zip Diaries::. The Welcome

Today, I attended my first all district meeting here in San Diego. It was held at the Carmel Mountain Ranch Country Club, a little less than a hundred agents met to discuss current market conditions and introduce the newbies (like myself) to the rest of this large district.

Christian our District Director was proud to say that our district had a 92% increase in closings when compared to May of last year.  –  Nice.

One of today’s guest speakers was from E-Loan(one of Zip’s partners).  When I was rocking with Redfin, I remember closing quite a few with them. Cathy from E-Loan spoke about the Nehemiah program. I wasn’t too familiar with it but I promised myself that I would do some research on how it works when I got home.

Here is what I found out.

The program was named after Nehemiah, the biblical leader who re-built the walls of Jerusalem.  FHA(Federal Housing Administration) lending guidelines allow for the 3% minimum down payment to come from a wide variety of sources. Secured, borrowed funds, retirement accounts, and “Gift” funds from family members, employers or qualifying Non-Profit entities. There were a large number of organizations set up over the years to provide these “Gift or Grant funds”.

Typically they would charge fees ranging $500-$1,000 to perform this service. The program has been under fire recently, when a number of these organizations lost their “Non Profit” status after review by the IRS.  Always. The model was threatened and FHA decided to limit the program to organizations that were Non-Profits. Some of the big players in this market are Nehemiah and Quick Down.

First off, the seller must agree in contract to participate in the program. The seller agrees to make a “donation” to the non-profit in an amount at or above the amount being granted to the buyer. Typically the amount is 3% + the administrative fee that the non-profit charges (now around $500-1000). Once the seller has agreed to make the donation, funds are reserved for the buyer. The day before closing, funds are ordered by the lender with instructions from the escrow company regarding wire transfers or cashier check requirements. At closing, the funds are used for the down payment for the buyer, while part of the seller’s proceeds are sent off to the non-profit as a donation. If the seller has also agreed to pay the buyer’s closing costs, the buyer can get into the home with little or nothing down.

The program works and remains approved by FHA. Check the site.

Tomorrow, I will reach out to Nehemiah and Quick Down to get some other questions answered for me, overall, this may be another piece to assist my clients in purchasing a home in today’s current market.