Yesterday...I posted an article about NACA...The Neighborhood Assistance Corporation of America...a non-profit community advocacy and homeownership organization. That post was an introduction and overview of the program. Today...I will attempt to answer your many and varied questions...based on my personal experience with NACA.
For the record...I DO have EXTENSIVE EXPERIENCE working with NACA. I closed my first transaction with NACA in June 2006. From that point, I personally closed 3-5 NACA transactions per month. My buyers' agents closed 1-2 per month, as well. Considering that the Raleigh, NC NACA office only averaged about 20 closings per month in 2006, our closings represent a fairly large percentage of the total. I currently have about 100 clients who are enrolled in the NACA program.
Now that I have established myself as a credible witness...I will share some of the things (wisdom...knowledge...'INSIDER SECRETS') I've learned from my vast encounters with NACA. (PLEASE FASTEN YOUR SEATBELTS...WE MAY EXPERIENCE SOME MILD TURBULENCE DURING OUR FLIGHT ;-)
To say that a NACA transaction is VASTLY DIFFERENT from traditional loan programs is an understatement, at best. The very first requirement, in the NACA process, is that the buyer must attend a 4 hour seminar. (The agent is also required to attend the seminar prior to being approved by NACA...to work with THEIR OWN BUYER!)
Assuming that everyone takes the first step...the next step is to schedule an appointment to meet with a NACA counselor. IF the client has ALL of their documentation in order (something I coach them to do EVEN BEFORE they attend the seminar)...it is possible to receive an appointment within a few weeks of the seminar. I also encourage my clients to call every few days and ask for cancelled appointments. In many cases, the very act of calling shows their level of interest and commitment...getting them in the door faster.
At their initial appointment, they could POSSIBLY receive an instant approval IF THEY PROVIDE ALL OF THE DOCUMENTATION NACA REQUIRES ...and...THEY QUALIFY BASED ON THAT DOCUMENTATION. I've had READY, WILLING and ABLE BUYERS approved within 3 weeks of attending the seminar. (Again...I coach my clients from the first day about the NACA process and give them the information they need to walk into their first appointment fully prepared.) IF they arrive unprepared...they WILL receive a list of required documentation and a polite invitation to call NACA again when they are prepared.
In either case...once NACA does approve a client...NACA will issue a loan commitment letter. This letter is not a pre-qualification...not a pre-approval...it is a commitment to lend...assuming that they have no changes to their qualifying circumstances AND the home passes the rigorous NACA standards. Based on the numerous transactions I've had with NACA...their loan commitment is STRONG! I've personally not had a single NACA transaction fall through.
Although NACA's approval process is NOT CREDIT DRIVEN...NACA does check credit and will not approve someone with BAD CREDIT. Instead...NACA will work with the client to repair their credit issues. Because NACA is a non-profit organization whose purpose is to promote homeownership...their primary objective is to ensure that the client can afford the home BEFORE they fund the loan. Therefore...NACA will not grant an approval until such a time as they can see 1) a 3 month savings pattern AND 2) a serious attempt to correct any bad habits that contributed to their bad credit.
To specifically address some of your comments.....
- Brandon said that "NACA doesn't usually work out too well for the seller." IF you think about the fact that NACA makes homeownership possible for MANY people who would otherwise NOT BE ABLE TO BUY...then it seems to me that NACA is good for sellers. More buyers equals more homes sold. Especially in the current market...NACA is a sellers' best friend. Furthermore...what is more frustrating to a seller than pulling his home off the market and having the deal fall through at the last minute. With NACA...there are some added headaches...but you can be confident that you will end up at the closing table.
- Grant wrote, "Most (buyers) fall out or don't complete the program." Unfortunately, Grant made a valid point. The process is lengthy and requires a tremendous amount of commitment. However...look at the reward (NO DP...NO CC...and a LOW, LOW, FIXED RATE!) With this program...it is particularly important for you to be in constant contact with your client. Keep them motivated and encouraged. THEY WILL THANK YOU IN THE END.
- Kris wrote, "IF they (my client) can be persistent...so can I!" EXACTLY!!!! And again...REMEMBER...with ALL of the issues in the lending world...these clients MAY NOT have any other option!
A FEW MORE POINTS TO CONSIDER (THE GOODIES!):
- In my opinion...NACA is SUPERIOR to any loan option for purchasing new construction. With NACA's stringent inspection/repair process...it does not work as well for homes that need extensive repairs. However, most of the transactions I have closed have been existing construction. Of those, only ONE was a foreclosure, but it was in fairly good condition.
- It is a good idea to educate the listing agent when you present a NACA offer. I have a letter that I present with EVERY NACA offer. It explains the benefits AND challenges of a NACA transaction. I find that my honest and upfront approach answers their questions and overcomes their objections.
- I said it before, and I'll say it again. NACA is NOT for EVERY BUYER! If your client has a time restraint...and other loan options...you should probably encourage them to investigate ALL of their options.
- I've referred to NACA's 'stringent inspection/repair process' several times. Your client MUST have an inspection performed by a NACA approved inspector, and the inspector submits the inspection report directly to NACA. NACA has a separate department (HAND) whose sole purpose is to evaluate the inspection report and generate a repair request. ALL repairs must be completed by a licensed contractor. NACA will not move forward with the loan until the seller agrees, in writing, to make the necessary repairs. Upon completion, the inspector will perform a second inspection to ensure that the repairs were done properly. I could write pages JUST about the inspection/repair process, but for your sake...I WON'T!
- NACA is not a lender, and the people who work for NACA are not loan officers...they are housing counselors. They are also typically overworked and overwhelmed. I have learned, the hard way, that faxes get lost...emails are not always returned in a timely manner...and sometimes, the counselors don't get around to calling the clients back for days. I DON'T LIKE IT, BUT I DEAL WITH IT. I am pro-active with the housing counselors. I follow up much more than I would with loan officers. I offer my services as the liason between the housing counselors and my clients. I take the iniative to get things done...before the NACA counselor even asks for it. I KNOW that many of my closings would have been delayed had I not taken this approach. IS IT MY JOB? YES and NO! It IS my job to ensure that my clients close on time...if it is within my control. By staying a step or two ahead of the process...I give my clients the VERY BEST I CAN GIVE. I think they deserve it, and they always appreciate the extra effort.
- LAST BUT NOT LEAST...when you refer a client to NACA...be absolutely certain that you document them in the NACA system. YOU need to register them for the seminar and enroll them on the NACA website. IF YOU DO NOT...AND IF THE CLIENT CONTACTS NACA ON THEIR OWN...you will have to pay a 33% referral fee to NACA at closing. THAT WOULD MAKE ME CRY!!!
I feel as though there is so much that I've NOT covered. I also feel that what I have covered is a bit overwhelming. Please do not be concerned! Once you learn the system...and YOU are already ahead of the agents who haven't read this post..NACA is no more difficult than any other non-traditional loan program. You just have to invest the time to understand the rules of the game!
For more information...visit naca.com
Written and Posted by:
Elizabeth Nieves -- Broker, REALTOR® -- The Elizabeth Nieves Realty Group @ Keller Williams -- www.ElizabethNieves.com
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