Neighborhood Stabilization Participants Get First Look at FHA REO

The Department ofrnHousing and Urban Development (HUD) has published guidelines for NeighborhoodrnStabilization Program participants (NSP) seeking a jump start on purchasingrnFederal Housing Administration (FHA) owned real estate (REO).   NSP qualified buyers will receive bothrnpriority status and a discount when purchasing property through FHA's FirstrnLook Sales Method, a part of its property disposition program.</p

NSP was establishedrnunder the Housing and Economic Recovery Act of 2008 which authorized $3.92rnbillion in emergency assistance for the redevelopment of abandoned andrnforeclosed homes and residential properties through Community BlockrnGrants.  The FHA REO property dispositionrnprogram is designed to dispose of properties in a manner that expandsrnhomeownership opportunities, strengthens neighborhoods and communities, andrnensures a maximum return to the mortgage insurance funds. </p

Eligible NSPrnpurchasers include governmental entities and nonprofit organizations which willrnbe using NSP funds, at least in part, to purchase the FHA property.  For-profit organizations are notrneligible.  The purchaser must submitrnrequired documentation to an applicable FHA Homeownership Center beforernparticipating in First Look. </p

When an REO propertyrnbecomes available for purchase within an NSP designated area, it will berndesignated a First Look property and the availability will be publicized to eligiblernNSP purchases within the geographic boundaries of the project.  The period between the conveyance of thernproperty to FHA and the receipt of an appraisal on the property shallrnconstitute the First Look consideration period which should last up to 12 daysrnon average.  During that period thernpotential purchases can look at the property, determine its suitability andrntheir eligibility to purchase that specific property.  Once the property is appraised, the potentialrnpurchaser has two days to submit a written offer to purchase it.  If no offer is received from an eligible NSPrnpurchaser during that two day period, FHA will make the property availablernunder its regular disposition procedures.</p

First Look willrnconvey the property to the purchaser for 10 percent below the appraised valuernless any applicable costs including commission. rnIn no case will the discount be less than 1 percent of the appraised propertyrnvalue.  Offers can include contingenciesrnfor environmental review, lead paint inspection and other provisions.</p

The complete list ofrnprocedures for qualifying to participate in First Look was published on July 15rnin the Federal Register and can be reviewed at http://edocket.access.gpo.gov/2010/pdf/2010-17335.pdf.rn

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