NEIGHBORHOOD STABILIZATION PROGRAM 3 (NSP 3)

1. NEIGHBORHOOD STABILIZATION PROGRAM 3 (NSP 3) Realtor Training

2. NSP3 Realtor Training Realtor Training

3. NSP3 Realtor Training Program Purpose • Stabilize Neighborhoods • Provide homebuyer assistance towards the purchase of foreclosed homes to qualified applicants • Redevelop substandard properties • Provide homebuyer education Before After

4. NSP3 Realtor Training NSP 3 Target Area • General Boundaries and Inclusions • Bell Road • Peoria Avenue • Perryville Road • Dysart Road • Original Townsite (OTS) • Kingswood Parke HOA

5. NSP3 Realtor Training Buyer Requirements • Income Eligibility • At or below 120% Area median income • Education and Counseling • Must receive one-on-one counseling • Must complete HUD approved 8-hour homebuyer education course through NHSPHX • Primary Residence • Property must serve as the applicants primary residence • NO INVESTORS

6. NSP3 Realtor Training Buyer Requirements Cont’ • Buyer Contribution • Must contribute a minimum of 1,000 or 1.75% of purchase price, whichever is higher, from their own funds • Borrower funds may be used for down payment, pre-paids, or closing costs • Client responsible for any earnest deposit required (to be applied to minimum contributions)

7. NSP3 Realtor Training Assistance Types • Down Payment Assistance • Provided as a soft second loan with recapture provision • Minimum assistance of $5,000 for households between 51% and 120% AMI • Buyers with annual income at or below 50% AMI will receive an amount based on a needs assessment calculation • Assistance level is based on qualification calculation vs. desire • Closing Cost Assistance • Provided as a grant, up to 6% of the purchase price towards normal and customary closing costs – includes a 1-year home warranty

8. NSP3 Realtor Training 1st Mortgage Requirements • Mortgages must be 30 year fixed-rate loans at prevailing interest rates • Debt ratios may not exceed 33% for housing expenses (PITI+HOA+PMI) and 45% for total debt • Purchase price may not exceed $263,150 • Maximum CLTV to be determined by lender

9. NSP3 Realtor Training Eligible Properties • Property must be located in Program Target Area (No pools) • Single-Family that is Foreclosed, bank-owned and VACANT • Purchase price must be discounted a minimum of 1% of current appraised value • PURCHASE CONTRACT MUST INCLUDE LANGUAGE REQUIRING THE 1% DISCOUNT AND CLOSING CONTINGENT UPON A CLEAR HUD ENVIRONMENTAL REVIEW – Buyer will not be eligible for assistance if language not included in purchase contract • Property must pass required HUD Environmental Review to be completed within 10 days of borrower initiating a purchase contract

10. NSP3 Realtor Training City of Surprise Inventory • Realtors receive 2% commission on homes in City of Surprise Inventory • No down payment assistance offered to clients who purchase from City of Surprise inventory. • Up to 6% closing costs grant still available. • Purchase price will be either cost of home plus repairs or appraised value whichever is lowest. • Principle Loan reductions available. Amount is dependent on need as calculated by Neighborhood Services Division.

11. NSP3 Realtor Training Key Factors • Buyer cannot currently own a home – program not designed to bridge financing to purchase a new home while waiting to sell current home • No Short Sales • No Investors • Property must be able to pass an FHA Appraisal inspection for funding. The program will not make improvements (rehab) to the property.

12. NSP3 Realtor Training Role of City of Surprise • Receive initial program inquiries from homebuyers • Pre-application intake to prescreen applicants for eligibility • Refer homebuyers to NHSPHX to obtain Homebuyer Counseling and Education • Provide Program Eligibility Letter • Issue down payment and closing cost assistance

13. NSP3 Realtor Training Role of NHSPHX • Receive client referral from City of Surprise • Receive initial program inquiries from homebuyers • Application Intake • Determine applicant eligibility • Provide one-on-one counseling • Provide homebuyer education • Refer qualified applicants to City of Surprise

14. NSP3 Realtor Training Steps to Receiving Assistance • Homebuyer contacts either the City of Surprise or NHSPHX • Homebuyer schedules orientation with NHSPHX • Homebuyer schedules one-on-one counseling appointment with NHSPHX • Counselor will (a) determine eligibility; (b) determine mortgage readiness; and (c) schedule homebuyer education class • CAUTION: Do Not put an offer on a property until homebuyer has received a Program Eligibility Letter from the City of Surprise • The average timeframe from pre-application to eligibility letter is 2 to 4 months.

15. NSP3 Realtor Training Steps to Receiving Assistance Cont’ • Lender will send counselor 1st mortgage credit package if available • If homebuyer is mortgage ready AND approved for a 1st mortgage loan, then the Program Eligibility Letter will be issued by the City of Surprise. The homebuyer will have 60 days to make a purchase offer on an eligible property. Funds will be reserved during this time. • Once purchase offer is accepted, the City will receive a copy of the executed purchase contract from buyer’s realtor. The City will complete the environmental review.

16. NSP3 Realtor Training Steps to Receiving Assistance Cont’ • Lender sends the City of Surprise complete loan package and final loan approval package which includes all property documents. • The City verifies the final loan approval package meets program guidelines and originates the 2nd lien documents for the down payment assistance. Once processed these documents are forwarded to the title company for closing. • Once assistance is approved and documents processed the City will remit assistance funds directly to the title company at closing.

17. NSP3 Realtor Training Contact Information City of Surprise Christina Ramirez, Neighborhood Services Supervisor E-mail: christina.ramirez@surpriseaz.gov Phone: 623-222-3238 Neighborhood Services Coordinator E-mail: jason.hughes@surpriseaz.gov Phone: 623-222-3239 Vacant, Neighborhood Services Assistant E-mail: Phone: 623-222-3241

18. NSP3 Realtor Training Contact Information Neighborhood Housing Services of Phoenix Chris Smith, Homeownership Center Manager Aris Perez, Senior Homeownership Counselor Phone: 623-932-3503 aperez@nhsphoenix.org

19. NSP3 Realtor Training FAQ • Who’s included in the household size? Everyone living in home; if claimed on taxes, they are included. • Who pays the earnest deposit? The homebuyer is responsible for paying earnest deposit no matter the cost, but will receive a refund at the end/applied towards down payment. Caution: HUD won’t return earnest money. • What’s included in closing cost assistance? COS pays up to 6% of normal and customary closing costs; does not include buying down interest rate. • Does the property have to be a HUD home? NSP applies to any bank-owned and/or HUD home.

20. NSP3 Realtor Training FAQ • Can the homebuyer offer more than the purchase price, then pay COS the difference? No • Can the homebuyer use gift money? Gift money may be used in addition to the $1,000 or 1.75% from own funds. • Why can’t the property have a pool? We can’t guarantee any issues such as fencing, repairs or maintenance costs. • Why can’t the property have a wood burning fireplace? City policy excludes fireplaces for energy efficiency reasons. • How do clients know I am a certified realtor? The City of Surprise has a list of realtors who have completed the NSP training class which is provided to all clients. • Can I show homes to clients who have not completed the NSP program? No, lockbox codes will only provided to realtors with clients who have received an approval letter.

21. NSP3 Realtor Training FAQ • Does the City of Surprise have a required list of lenders? No, but lenders can be found on HUD.GOV. • Are homes in the City of Surprise inventory listed on MLS? No, they are not advertised. • Can the one on one counseling be conducted over the phone? No, the one on one counseling must be conducted in person. • Can the monies be used to buy down interest rates? No • Does the City of Surprise pay for appraisals/inspections and warranty? Yes, the City of Surprise will pay for all, but will need to schedule them except for the warranty which is paid at closing and ordered by the homeowner.

22. Questions or Comments? NSP3 Realtor Training