These are handled very differently than a traditional sale and there are a couple of pitfalls you will want to avoid.
1. Make sure your owners purchase date and orders date align with the program acceptable dates. 2. Make sure your client hasn't taken any additional loans or lines of equity on the property *. Only the original acquisition loan and *additional loans used 100% for property improvements (that can be documented) are covered. EVEN if they just refinanced the original loan to a lower rate there may have been fees involved (I had a client whose fees were over $3,000) and those are NOT COVERED BY THE PROGRAM.
3. You will want your seller to apply in advance and obtain program approval before going on the market if possible.
4. Make sure potential buyers are aware that there is a subtantially longer review time than a normal contract. Once the property goes under contract with a seller pre-approved HAP benefit it will still take 45-60 days to review in preparation for settlement. A HAP is NOT a short sale. There is no bank approval involved and the bank receives full payment on the loan. But you need to have a contract contingency to cover the HAP approval process to protect your seller.
5. They will require that you completely replace your existing contract with the buyer to the government contract. I incorporate that contract into the original contract with an addendum stating the buyer agrees to execute the new contract upon HAP approval.
6. They will limit what closing help is allowed by making certain standard approved costs such as transfer taxes unapprovable and requesting the buyer pay them all. We found a way around this with a government exemption for their portion of transfer taxes.
I've done three of these with each payout to the military member mortgage company, realtor and buyer being in excess of $100,000. It is an amazing benefit but I have found the people running the program are very overworked and uncooperative, particularly with Realtors. And they definitely do not provide the Realtor on the transaction the information needed to transact it. I have one awesome contact at our regional office. I'm happy to share info. with you via e-mail or phone call to help you avoid the pitfalls I ran into. Best of luck!
If you need assistance please contact me.
I am never too busy for your referrals
The San Diego Property Shop
CA DRE # 00648687