March 24, 2016 at 1:53 pm #31825
I have had my action plan items completed for over a month and was waiting for my MC to process my verifications for submission to underwriting. The verification were sent out 4 weeks after I originally authorized them due to no fault of my own. I just received notice that the maximum purchase price has been reduced and even though I easily qualify for more based on my income, I am now being told that the affordability is being changed which drastically reduces my options. I have also been saving the required shock payment as stipulated in the action plan. If you had your intake counseling session and fulfilled every item as requested in a timely manner well before the maximum price change, shouldn’t you be grandfathered into the purchase price and original affordability you signed and was counseled under? Also even though I have been told the maximum purchase price has changed the original higher amount is still on the website for my area.March 24, 2016 at 2:10 pm #31826
I think you have to “go to bank” to have things set in stone. What was the change?March 24, 2016 at 4:16 pm #31835
The maximum regional price was reduced from 400000 to 212000March 24, 2016 at 4:34 pm #31838TRW2294Participant
What area are you in Betand?
That is a huge difference? to just drop.March 24, 2016 at 4:35 pm #31839TRW2294Participant
Could maybe your counselor stated that your maximum purchase price changed, and not the regional amount.March 24, 2016 at 5:12 pm #31843
Las Vegas, I was told it was the regional amount. I asked for clarification/escalation and no one will return my calls.March 24, 2016 at 6:20 pm #31851
There were indeed some recent changes made regarding Regional Purchase Limits. Here’s what and why:
The reason for a NACA maximum purchase price is to keep the focus on NACA’s mission of assisting low and moderate income people in obtaining affordable home ownership and stabilizing low and moderate income communities. To this end, NACA does not have any limits (i.e. either a maximum income or purchase price) for low and moderate income people and areas. The maximum purchase price only pertains to those who fall outside the categories described below.
• Members whose income is below 80% of the median income for the greater Metropolitan Statistical Area (MSA).
• Buying a property in a Census Tract neighborhood for which the median income is below 80% of the greater MSA median income.
For those who meet the above criteria, there is no maximum purchase price limit. They can make any purchase within their determined affordability. Members who do not meet the above criteria must purchase within the NACA Maximum purchase prices and are the only group for which the Maximum Purchase Prices apply.March 24, 2016 at 8:07 pm #31854
When will the designated Census Tracts be available? I went to my local office as directed and although the maximum region price has changed and is in effect, I was told the areas have not been defined and/or the office has not been notified.March 25, 2016 at 9:52 am #31859
Whew… I almost got super upset!! I purchased a max price home and would have loved an additional $5k to do one more thing (when does that really stop though)!!! I wouldn’t have qualified anyway.March 25, 2016 at 10:33 am #31862
The determinations of median income levels and determination of median income for Census Tracts is done by the FFIEC (Federal Financial Institutions Examination Council), a federal inter-agency organization that sets standards for much of the financial industry.
You may be able to find that information on their website, https://www.ffiec.gov/.March 25, 2016 at 11:18 am #31865nacabuyer1Member
Right a week before closing they told us that “SUSPEND PENDING CHANGE IN TERMS TO REMEDIATE HOEPA VIOLATION
AT CURRENT TERMS LOAN REQUIRES BANK PAID PE TO REMEDIATE HOEPA VIOLATION / BORROWER INCOME AND PROPERTY LOCATION DO NOT QUALIFY FOR BANK PAID PE” and instead of buying down 7 points they limiting us to only 4? Does anyone know why ? We haven’t heard from NACA and our closing date is March 28th. Obviously we won’t be able to close on that date and asking for an extension, have anyone heard why they limiting people ? We have income that above median income for our state , and NACA made this change a week before closing 🙁March 25, 2016 at 1:56 pm #31868
@ nacabuyer1… Tim is the man.. see below>>>
The lowest possible rate for a BOA loan is indeed 0.125%. Citi loans may go to 0.0625%.
Anyone may buy down the interest rate. The only questions are with regard to how far an individual may buy it down as the law sets certain limits regarding how much the buyer or seller may contribute.
The BOA AND Citi buy-down programs work as follows (Remember, you asked for it!):
— NACA Interest Rate Buy Down, HOEPA limitations and Participating Lender Grants —
NACA Interest Rate Buy Down:
1% of the loan amount (also called “one point”) reduces the borrower’s interest rate by 0.25% for a 30-year loan. One point reduces the borrower’s interest rate by 0.50% for a 15-year loan.
Example: Loan amount is $120,000. Interest rate for the day of application is 4%
One point = $1,200. Two points = $2,400. Three points = $3600 and so on. $1,200 to interest rate buy down get to a new rate of 3.75% for a 30 year loan and 3.50% for a 15 year loan; $2,400 to interest rate buy down gets to a new rate of 3.5% for the 30 and 3.0% for the 15; $3,600 to interest rate buy down gets a new rate of 3.25% for the thirty and 2.5% for the 15, and so on.
The Home Ownership Equity Protection Act (HOEPA) limits the total points and fees which can be contributed by the buyer to 7% of the loan amount (7 points) total.
Points and fees limited to 7% for a NACA loan includes:
• Interest rate buy down paid by the Member. Included are third party contributions to the Member, i.e. grants and gifts paid to interest rate buy down on the Member’s behalf.
• The HAND fee – Files to Citi always – $500. Files to Bank of America always 3% of the total funds held in escrow to complete repairs after closing.
• Broker fees the lender pays to NACA – Bank of America only – $3,000
Note: Seller contributions to reduce interest rate are not included in the seven percent limit, however the seller is limited to contributing 10 points towards interest rate reduction (2.5% or 5% off of the interest rate).
Note: There is no limit to the amount that a NACA Member can contribute to reduce the loan amount (down payment, principal reduction). After 7% of the loan amount goes to interest rate reduction, the Member’s contribution will reduce the loan amount.
NACA Program Lender Grant: Low and moderate income Members qualify for a lender Grant thus the interest rate buy down is not limited.
Low and moderate income for purposes of the lender grant within the NACA program is defined as 100% or below the Metropolitan Statistical Area (MSA) median income for the area the Member purchases as documented by the Federal Financial Institutions Examinations Council (FFIEC). The website to check the median income for the NACA Member and determine what is the track median income for the property that is being purchased is:
Note: The income used in determining lender grant eligibility is all income included on the bank application.
Bank of America Lender Grant Formula:
7% of the loan amount minus $3,000 (loan origination paid by the lender) minus the HAND fee (3% of the amount held for repairs) equals the total maximum allowable Member contribution to interest rate buy down. For members that qualify for the grant, additional funds contributed will be diverted to principal reduction and the lender will match the amount in interest rate buy down. The interest rate can be bought down in increments of .125% (half points) to a final interest rate of .125%
CitiMortgage Lender Grant Formula:
7% of the loan amount minus $500 Hand fee when funds are held to complete repairs after closing equals the total amount of Member funds to interest rate buy down. For members that qualify for the grant additional funds will be diverted to principal reduction and the lender will match the funds in interest rate buy down. The interest rate can be bought down in increments of .0625% (quarter points/one-eighth points) to a final interest rate of .0625%
Bank of America:
The Member is contracted to purchase a house for $100,000. The starting interest rate is 4%. There is no escrow for repairs. The Member wants to put $8,000 to interest rate buy down on a 30-year loan and is at 75% of the median income.
$8,000 buys the rate from 4% to 2%
The maximum contribution to points is 7% or $7,000.
For the 30-year loan, $7,000 – $3000 = $4000 ($4,000 is the highest amount the Member can put to interest rate reduction). $4,000 of the Members money will go to interest rate buy down and the other $4000 will go to principal reduction creating a new loan amount of $96,000 rather than $100,000. The lender will match the $4000 and offer the final interest rate of 2%.
If in the same example, the Member was over 100% of the median income, the same $8000 would result in a loan amount of $96,000 but no lender grant match to reduce the interest rate so the final interest rate is 3.0%.
The same scenario for the 15 year loan, $4,000 of the Members money will go to interest rate buy down and the other $4000 will go to principal reduction creating a new loan amount of $96,000 rather than $100,000. The lender will match the $3750 needed to offer the final interest rate of 0.125%.
If in the same example, the Member was over 100% of the median income, the same $8000 would again result in a loan amount of $96,000 but no lender grant match to reduce the interest rate so the final interest rate is 2.0%.
Example for CitiMortgage:
The Member is contracted to purchase a house for $100,000. The starting interest rate is 4%. There is no escrow for repairs. The Member wants to put $8,000 to interest rate buy down and is at 75% of the median income.
For a 30 year loan, $8,000 buys the rate from 4% to 2%
Seven points ($7,000) from the Member can go to interest rate reduction. The eighth point ($1,000) goes to principal reduction, and the lender contributes a matching $1000 toward interest rate reduction. The loan amount will be $99,000 with an interest rate of 2%.
If in the same example, the Member was over 100% of the median income, the same $8000 would result in a loan amount of $99,000 but no lender grant match to further reduce the interest rate so the final interest rate is 2.25%.
For a 15 year loan, seven points ($7,000) from the Member can go to interest rate reduction. The eighth point ($1,000) goes to principal reduction, and the lender contributes a matching $875 toward interest rate reduction. The loan amount will be $99,000 with an interest rate of 0.0625%.
If in the same example, the Member was over 100% of the median income, the same $8000 would result in a loan amount of $99,000 but no lender grant match to further reduce the interest rate so the final interest rate is 0.50%.
Head spinning yet? 😉March 26, 2016 at 7:01 pm #31878nacabuyer1Member
I am still waiting from BofA to answer me , they limited us to only 4 points without any explanations and changed our interest rate , now my realtor told me that thry are reviewing it and may be we could get 5% , why ? Why can’t I buy down all 7% if I have the money to do so ? So tired. After going through the whole process since June of the last year and being one week away , they started asking more documents and copy of my HUD1 that happened 4 years ago, then on my bank application some how they marked me as delinquent , I asked to fix it , and they crossed it over , because I am not delinquent , but some how application was sent to BofA and they asked for Letter of explanation why I am in delinquency … I was one week from due date to close on the house. We are still dealing with underwriter even though I was approved and on March 9 they told us that it’s ok to let the landlord know and give them our 30day notice . I am so glad I didn’t , I would of been on the street with 3 kids and a dog and who knows if we close on the house or not . Tim, please help us . I do not know who to ask for help. No one is returning my calls or emails.we made an offer on December 8th and still haven’t closed . Our extension till April 22nd and I hope it will happen and we will buy a house we wanted . Please wish me best !March 28, 2016 at 5:59 pm #31899May 4, 2016 at 11:22 pm #32490bebe1960Member
nacabuyer1, can you tell me if you are over the median income level for your area?
Did you ever get an answer why you were being limited to 4%?
We are in a similar boat but have some time before we get to the closing process. Still waiting for the house to be built.
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