We're inching along toward the release of the Oregon Neighborhood Stabilization Program funds for eligible home buyers purchasing foreclosure homes. Although Oregon is not yet accepting reservations for these program funds, they have updated the underwriting guidelines to reflect their interpretation of the most recent HUD amendments. As of today, these guidelines are not yet posted to their website, but the main changes I see are there is a matching fund requirement for down payment funds and the below market current appraised value requirement was reduced from 15% below market to 1% below market. Here is a letter I sent to program administrators:

"Thank you for sending me the updated NSP underwriting guidelines. I see it is confirmed that the 15% below current appraised value requirement was reduced to 1%, which will help address the bank REO cooperation. We'll have to see about getting them to pay for the appraisal upfront, though.

It appears that NSP added a matching down payment funds requirement to the guidelines that was not there previously and limits total NSP funding to 20% of acquisition cost (plus closing costs, prepaids, repairs). That effectively eliminates all the buyers I have waiting in the wings that are not obtaining USDA Guaranteed Rural Housing financing.  No City of Medford or Central Point purchases unless the buyers can go with FHA or Conventional Financing and have at least 1.75% down payment for FHA or 2.5% for conventional plus higher credit score requirements.

For example, one of the buyers I am working with was approved for OR Vet plus NSP, but will not be able to meet the matching down payment requirement under NSP. He will have to consider the more costly USDA GRH program (lower interest rate, no funding/guarantee fee on OR Vet program he is approved for) since this disabled Vet does not meet the Federal VA loan program guidelines and cannot meet the NSP matching down payment requirement.  I'll work to get him approved under the USDA GRH loan instead, and let his agent know to scratch any Medford or Central Point properties off the list and reduce the price range below the $130,000 he is looking in, to offset the higher rate + 2% guarantee fee.

Back to the drawing board I go to see who is left that may qualify under the revised Oregon NSP guidelines, so they'll be positioned and approved for their primary loans once reservations are opened.".

Southern Oregon home buyers, if you are considering utilizing program funding from the Oregon Neighborhood Stabilization program, make sure the team of professionals you have chosen to work with you are familiar with the complex requirements!

See you at the closing table!

Karen Cooper - OR/CA Mortgage Consultant - www.Qaultiy4Loans.com