FIRST LOOK PROGRAM. FHA First Look Sales Method - Introduction. Stabilization Trust and HUD s National First Look Program

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1 U.S. Department of Housing and Urban Development FIRST LOOK PROGRAM Neighborhood Stabilization Program Problem-Solving Clinic Neighborhood Stabilization Program Neighborhood Stabilization Program FHA First Look Sales Method - Introduction FHA First Look provides NSP grantees exclusive access to review and purchase newly conveyed FHA real estate-owned (REO) properties that are located in their NSP designated areas as approved by HUD. Grantees will have the opportunity to make a purchase offer on a property prior to it being made available to other entities. NSP grantees can purchase these properties at a 10% discount off of the appraised value (less any applicable commissions, etc.). U.S. Department of Housing and Urban Development 2 Stabilization Trust and HUD s National First Look Program On September 1, HUD Secretary Shaun Donovan announced the launch of HUD s National First Look Program in partnership with the Stabilization Trust. HUD s National First Look is an expansion of the Stabilization Trust s existing program to make First Look a more integral tool in the NSP toolbox. Stabilization Trust buyers can view FHA First Look properties through REOMatch or through the FHA First Look website. U.S. Department of Housing and Urban Development 3 U.S. Department of Housing and Urban Development Neighborhood Stabilization Program 1

2 Access Period The duration of the FHA First Look period is approximately 14 business days: Consideration period - average 12 days from the time FHA first receives property until appraisal Purchase period - a 2-day window after appraisal to submit purchase offer After the FHA First Look period has expired, the properties will be listed for purchase under FHA s standard sales methods (lottery, competitive sale, etc.). No preference will be available to NSP grantees after the FHA First Look period has expired. U.S. Department of Housing and Urban Development 4 Eligibility NSP grantees, including Government entities and Nonprofit organizations, either as: Direct recipients of NSP funds, or Sub-recipients (or sub-awardees) of direct NSP grantees Under NSP2, consortium members may also be included NOTE: For-profit entities are NOT eligible to participate in FHA First Look. U.S. Department of Housing and Urban Development 5 NAID Processing NSP Grantees must apply to their FHA Home Ownership Center for a Name and Address Identifier (NAID) with the Payee Type NS, which designates them as an eligible NSP purchaser for FHA First Look properties. For grantees with an existing NAID with a payee type indicating government or nonprofit, it is necessary to resubmit the application to the HOC to add the payee type NS to your NAID. U.S. Department of Housing and Urban Development 6 U.S. Department of Housing and Urban Development Neighborhood Stabilization Program 2

3 NAID Processing The approval process after submission lasts approximately 7-10 business days. Application forms and instructions for resubmissions can be found at: tlook_ pdf. U.S. Department of Housing and Urban Development 7 NAID Approval Once the NAID number has been approved, an will be sent to the eligible purchaser with the following: Assigned NAID number Description of the information that will be received from HUD when a new property is available in a grantee s designated area Description of the notification that HUD will provide when appraisal information is available on a property available in a grantee s designated area Instructions to login and use the FHA First Look website U.S. Department of Housing and Urban Development 8 REOMatch Stabilization Trust buyers will be able to view FHA First Look properties in REOMatch. U.S. Department of Housing and Urban Development 9 U.S. Department of Housing and Urban Development Neighborhood Stabilization Program 3

4 REOMatch Stabilization Trust buyers will see their self-designated target area polygons in REOMatch and overlays of the HUD Approved NSP 1 and NSP2 target areas. U.S. Department of Housing and Urban Development 10 REOMatch FHA properties will be designated by the FHA logo. U.S. Department of Housing and Urban Development 11 REOMatch Stabilization Trust buyers will have the same options with FHA properties to store information and communicate with the Transaction Desk as with properties from other financial institutions. However, if interested in a property, it will be necessary to contact the FHA Asset Manager via the contact information provided by the FHA First Look website (link will be available in REOMatch). U.S. Department of Housing and Urban Development 12 U.S. Department of Housing and Urban Development Neighborhood Stabilization Program 4

5 REOMatch When clicking on an FHA property in REOMatch, an FHA dialog box will appear. U.S. Department of Housing and Urban Development 13 REOMatch Two links will be available through this dialog box: Further information about the FHA First Look Sales Method and NAID process: FirstLook_ pdf Access to the FHA First Look website: To initiate the transaction, the Stabilization Trust buyer will be required to access the FHA First Look website. U.S. Department of Housing and Urban Development 14 FHA First Look Website To gain access to properties and submit bids, eligible purchasers will need to access the FHA First Look website as seen below: U.S. Department of Housing and Urban Development 15 U.S. Department of Housing and Urban Development Neighborhood Stabilization Program 5

6 FHA First Look Website FEATURES OVERVIEW: Multiple Layer Options Navigation Controls Designated Area Boundaries Mapped Properties Property Data Table Excel Export Option Get Help U.S. Department of Housing and Urban Development 16 FHA First Look Website HOW TO USE THE PROPERTY DATA TABLE: First Property has appraisal. The two day purchase period has begun; Contact the AM Company to make offer. Second Property in consideration period; Contact the AM Company to inspect; Wait for notification of appraisal to make offer Third Property has no AM Company assigned; Wait for notification that the AM has been assigned. U.S. Department of Housing and Urban Development 17 FHA First Look Website HOW TO CONTACT THE ASSET MANAGER (AM) Click on the button Read the Requirements in the pop-up window You re Eligible to purchase You have signatory authority Property is in your designated area Purchased will be financed in part or in whole with NSP funds Follow program rules, such as Affordability, Tenant Protections, Environmental Review, etc. Click on the button U.S. Department of Housing and Urban Development 18 U.S. Department of Housing and Urban Development Neighborhood Stabilization Program 6

7 FHA First Look Website ASSET MANAGER CONTACT INFO: ABC Management Mrs. Green Street, City, State, Zip Note that multiple AM Companies may work in your geographic area. Thus, individual properties may have different AM Companies assigned to each other. U.S. Department of Housing and Urban Development 19 Inspections and Offers Purchasers will receive s notifications from the FHA First Look website if one of three things happens: 1. A new FHA First Look property appears in the grantee's designated area. 2. A new property has an Asset Manager assigned, thus giving the purchaser a contact for inspections and offers. 3. An appraisal is completed on a new property, thus beginning the 2-day window to make an offer. The offer period will run for two (2) business days after notice of the appraisal has been transmitted. U.S. Department of Housing and Urban Development 20 Inspections and Offers The appraised value will be available on the FHA First Look website. NOTE: Only those individuals listed by the grantee as having signatory authority to purchase properties may submit offers. Offers submitted by those without signatory authority will be rejected by Asset Managers. U.S. Department of Housing and Urban Development 21 U.S. Department of Housing and Urban Development Neighborhood Stabilization Program 7

8 Inspections and Offers The offer should be for 100% of the appraised value and the Asset Manager will calculate the discount. When the offer is accepted, the grantee will be notified via and will have a limited period of time to submit a sales contract and other addendum with an ink signature. U.S. Department of Housing and Urban Development 22 Purchase Agreements and Closing The standard FHA single family sales contract HUD Form 9548 must be used: df Contingent contracts will be accepted, which will allow purchasers time to satisfy NSP program requirements, such as environmental reviews and other requirements. U.S. Department of Housing and Urban Development 23 Purchase Agreements and Closing Guidance for contract contingency language can be viewed at: grams/neighborhoodspg/pdf/cond_purchase_agreement.p df Closing timeframe is 30 days. Extensions to the 30-day closing timeframe may be approved on a case-by-case basis (i.e. for purposes of completing required environmental reports). U.S. Department of Housing and Urban Development 24 U.S. Department of Housing and Urban Development Neighborhood Stabilization Program 8

9 Who is responsible for ordering an appraisal? The Asset Manager handles the appraisal process. How do I find out who the Asset Manager is for my area? Asset Managers are listed on the FHA First Look website at: U.S. Department of Housing and Urban Development 25 Why couldn t I find a contact person to facilitate sale? The First Look sales method was released at a time when FHA was transitioning between phases of property management contracts. This has changed how eligible purchasers contact the appropriate person to facilitate the sale. The new Asset Managers have been trained on First Look and on the NSP program. The contact information newly available through the First Look website has been confirmed by the Asset Managers. Also, please remember that Asset Managers are only assigned after the property is prepared for entry, which can take about 7 days. You will receive an notification when assigned. U.S. Department of Housing and Urban Development 26 Is Earnest Money required on these purchases? The amount required for the earnest money deposit depends on the purchase price of the property. The minimum amount is set at $500 for properties selling for $50,000 or less. For properties selling for more than $50,000, the earnest money deposit shall be between $500 and $2,000, based upon the sales price and the discretion of the asset manager. U.S. Department of Housing and Urban Development 27 U.S. Department of Housing and Urban Development Neighborhood Stabilization Program 9

10 Will FHA sign a tenant protections certification? FHA will not execute the seller certification document because all tenant notifications occur prior to the property being conveyed to FHA. FHA will communicate the date of foreclosure and information as to whether the property was occupied at that time. Will these properties be vacant? The majority of FHA properties will be vacant. U.S. Department of Housing and Urban Development 28 Are there funding requirements for these transactions? FHA First Look properties must be purchased must be purchased in part or in whole with NSP funds Program income can be used. NSP funds can be combined with other funding sources to complete the purchase of the FHA First Look property. U.S. Department of Housing and Urban Development 29 Will multi-family properties be included in the FHA First Look property listings? At this time, only single-family properties (1-4 units) will be included. Does FHA have a preferred title company? If yes, is there any FHA-incentives tied to an FHA-preferred title company? No, purchasers can use the title company of their choosing. U.S. Department of Housing and Urban Development 30 U.S. Department of Housing and Urban Development Neighborhood Stabilization Program 10

11 Will the Target Area polygons drawn in REOMatch be available on the FHA First Look website? No, the FHA First Look website will only display the HUD-approved NSP target areas. In REOMatch, Stabilization Trust buyers will be able to view their selfdrawn target area polygons and the HUD-approved NSP areas will be visible as polygon overlays. U.S. Department of Housing and Urban Development 31 Frequently Asked Questions We currently purchase foreclosed FHA properties by bidding on the HUD website and receive a 10% discount. Does the new FHA First Look program replace the existing bidding process? FHA First Look is a new sales method for NSP grantees only. FHA First Look does not replace any of FHA s standard single family disposition procedures. Not having an NS payee type added to your NAID does not preclude you from buying non-fha First Look properties through the standard process. Purchasers do not bid online during the FHA First Look period. Purchasers interested in an FHA First Look property must contact the Asset Manager directly. U.S. Department of Housing and Urban Development 32 Can an NSP grantee obtain their own third-party appraisal, and if it differs from the FHA appraisal, is the purchase price negotiable? No, FHA REO property appraisals and the establishment of the property sales price are responsibilities that are assigned to Asset Managers. FHA appraisals are the only valid appraisal for FHA First Look purchases. U.S. Department of Housing and Urban Development 33 U.S. Department of Housing and Urban Development Neighborhood Stabilization Program 11

12 Are Asset Control Area (ACA) properties included FHA First Look? No, ACA properties will remain separate from those FHA properties offered through FHA First Look. U.S. Department of Housing and Urban Development 34 Can eligible purchasers make an offer at any point in the 14-day FHA First Look period or just during the twoday offer period? No, NSP requirements preclude purchasers from making an offer until the appraised sales value has been established. Once the appraised value has been calculated and the purchaser has been notified of the appraisal-based sales price, the purchase period is initiated, and lasts for two (2) business days. U.S. Department of Housing and Urban Development 35 Will purchasers be working with just one asset manager in their target area or will there more than one asset manager? There may be more than one asset manager for a given area. Their assignments are property-specific. Interested purchasers must confirm the property agent contact information for a given property through the FHA First Look website: U.S. Department of Housing and Urban Development 36 U.S. Department of Housing and Urban Development Neighborhood Stabilization Program 12

13 Who determines the discount and how is it calculated? The asset manager will calculate the FHA First Look sales discount. If an eligible NSP grantee uses a real estate broker to help facilitate the purchase, there will be a fee for that service. This fee will be subtracted by the asset manager from the FHA First Look sales discount provided to the grantee. The FHA First Look discount sales price cannot be less than 1% off the listed sales price after all commissions and other fees are accounted for. U.S. Department of Housing and Urban Development 37 Can purchasers view FHA properties in REOMatch after the FHA First Look period has expired and they are available through the competitive bidding process? FHA First Look property files will only be posted to REOMatch during the FHA First Look period. Once this period has expired and a given property has not been purchased, it is no longer included among those properties that can be viewed on REOMatch. FHA REO properties that are available for purchase under standard single family disposition processes can be viewed at the HUD Home Store site: U.S. Department of Housing and Urban Development 38 Who To Contact I need to apply for an NAID number, I need the NS payee type added to my NAID Number, or I have questions regarding the status of my NAID application. Contact the FHA Homeownership Center (HOC) that has jurisdiction over single family transactions in your state. A complete list of HOCs can be found at: your application to one of the following HOC - NSP NAID addresses for expedited processing: Denver: NSP NAIDDENHOC@hud.gov Philadelphia: NSP NAIDPHILAHOC@hud.gov Atlanta: NSP NAIDATLHOC@hud.gov Santa Ana: NSP NAIDSAHOC@hud.gov U.S. Department of Housing and Urban Development 39 U.S. Department of Housing and Urban Development Neighborhood Stabilization Program 13

14 Who to Contact My HUD approved NSP target areas are displayed incorrectly in the FHA First Look website Grantees should send an to I am having trouble contacting the agent listed for an FHA First Look property and am unable to gain access for inspection purposes Contact the HOC and ask to speak with the GTR/GTM for the asset manager in question. U.S. Department of Housing and Urban Development 40 I have questions about the bidding process or closing/title related issues Contact the asset manager indicated on the FHA First Look website. If you have difficulty reaching the asset manager, contact the HOC to request assistance. U.S. Department of Housing and Urban Development 41 Contact Information FHA Homeownership Centers: FHA First Look Website: Community Connections Helpdesk: Information Center: , Option 2 comcon@comcon.org U.S. Department of Housing and Urban Development 42 U.S. Department of Housing and Urban Development Neighborhood Stabilization Program 14

15 Contact Information Stabilization Trust Transaction Desk Manager Office: (214) U.S. Department of Housing and Urban Development 43 U.S. Department of Housing and Urban Development Neighborhood Stabilization Program 15