BUYER ASSISTANCE PROGRAM vs. CLOSING COST CREDIT - HOW DO YOU WRITE IT?

By
Services for Real Estate Pros with Hartford Escrow

As everyone is aware there has always been the ability to have the Seller Credit the Buyer towards closing costs, whether recurring or non-recurring.  There is now a variety of Buyer Assistance Programs for either down payment or closing costs as well (ie; Nehemiah, HART, CHDAP).  However there IS a difference in how you write it in your offers.  I have an escrow that is closing tomorrow and in the offer the Selling Agent states that the Buyer is pre-approved for Nehemiah and Seller to credit $8,000 towards Buyers Closing Costs recurring and ... that's it nothing else the final word was "and"

So after reading that, what does it say?  Technically that the Seller will give a TOTAL of $8,000 to Buyer for said costs.  Well, now I'm going to docs and I receive the Nehemiah paperwork and there is a minor glitch.  The Nehemiah Program is $8,000 and they also have on top of that a $399 processing fee to also be paid by the Seller which was not disclosed.  Luckily when I emailed the Seller the Nehemiah paperwork, including the additional $399 he signed.  Yeah, we're good to go!

Are you with me so far?

Now we are looking at the Lender's Instructions for the Buyers loan docs and my bubble was burst.  The Lender's Instructions state that the Seller is to pay for a few of the Buyer's loan fees totaling $1,800+.

Let's do the math: $8,000 + $399 + $1,800+ = $10,199+ ????   So who's going to pitch in and help out?  The Selling Agent is not budging.  States that they ALWAYS right their offers with that exact verbiage and it's never been a problem.

So here I am doing what I do best, I started groveling with the Lender, after sitting on hold for "22" yes "22" minutes.  Well above and beyond the call of duty. 

The Lender is changing their Lender's Instructions to show those fees to be paid by Buyer because they were already disclosed to the Buyer on their estimated closing statement which they signed at doc signing.  I also had provided them a copy of the Buyers closing funds I received via wire with those fees included.

Chalk this up to a lesson learned to the Selling Agent.  I made a suggestion that to avoid any other last minute hiccups on future transactions down the road that they might want to make an offer more like this: Seller to pay "$ x amount" towards Nehemiah Program (or whatever program it may be) + processing fee and Seller to pay up to "$ x amount" towards Buyers recurring and non-recurring closing costs.  This way all bases are covered.

BTW, this was an REO!  Do you know of any banks that will say, "Sure, I'll pick up the extra costs even though the offer wasn't clear?"

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Ambassador
1,119,351
Russ Ravary ~ Metro Detroit Realtor call (248) 310-6239
Real Estate One - Commerce, MI
Michigan homes for sale ~ yesmyrealtor@gmail.com

Wow that is a interesting situation.  Banks are not very flexible right now

Jul 24, 2008 01:57 PM #1
Rainer
34,461
Sharon Roark
United Real Estate Lexington - Lexington, KY
Realtor Extraordinaire in Lexington KY

Thanks for the heads up, Nancy.

Jul 24, 2008 01:59 PM #2
Rainer
3,628
Nancy Neilen
Hartford Escrow - Rancho Mirage, CA

Russ,

Yes I know.  That's why I felt I HAD to share.

Jul 24, 2008 01:59 PM #3
Rainmaker
1,472,193
Donna Harris
Donna Homes, powered by JPAR - TexasRealEstateMediationServices.com - Austin, TX
Realtor,Mediator,Ombudsman,Property Tax Arbitrator

I hate offers that say $x amount AND this fee and that fee.  I write offers that say $x amount which INCLUDES this fee and that fee, so everything is disclosed in one number and people don't have to do simple math to figure out what a true number is.  I'm simple.  I can't believe the seller agreed to the additional servicing fee since it wasn't in the actual contract.

Jul 24, 2008 02:03 PM #4
Rainer
3,628
Nancy Neilen
Hartford Escrow - Rancho Mirage, CA

Donna,

I agree with your verbiage as well.  My Selling Agent just botched it on hers.  If She new her Buyer was pre-approved for the Program then she should've known what the fees were and then add additional monies for closing costs.  Or at least one would think that ;-)

Jul 24, 2008 02:08 PM #5
Rainer
157,723
Michael Kitsch
Coldwell Banker - Katy, TX

Now that Nehemiah is no more, what are you using?  Is it working for you??

Feb 03, 2011 10:10 AM #6
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Rainer
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Nancy Neilen

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