Ship is another word for county down payment assistance programs. This usually gets your buyer in for $1,000–they do require the buyer to have a minimum investment and that’s usually the magic number. It’s “free” so it’s really the best way to go but they do have to qualify based on income, it’s extra paperwork for the lender and takes a bit more time and the home usually has to pass stricter inspections than normal. I’m in Orlando and use their city and county programs and it’s a GREAT tool for the right buyer and house!
(?) Getting the Down Payment for Your Buyer - Posted by Eric Jessen
Posted by Eric Jessen on July 25, 2001 at 14:57:44:
I enjoyed Steve Cook’s first place article “Getting the Down Payment for Your Buyer”. He suggests paying the buyers, who do not have any money of their own, a fee to do “something” that they then turn around and give back to you as a down payment.
However, I have spoken to two mortgage brokers who swear that ANY method of moving money into the hands of buyers, that is to be “repaid” in the form of a down payment or as a reimbursement (or any other way), is a federal felony. Is this true?!?!?!
Is there any legal way to do what he suggests? Can I “gift” or pay money to a buyer, who has no money, the amount they need to buy a house? Can I mark-up the the negotiated cost of a home to cover closing costs and other “fees”, including a fee to me as a consultant. This fee would recoup the money I gave them plus add a small profit for the service?
Is there anything like that out there that is legal?
I have to also say that would still be considered an “inducement to purchase” which is illegal. But - I’m no lawyer and I know Mr. Cooks idea is probably a tested one so I won’t act like an expert in this area.
However, I am a mortgage broker and I deal mostly with first time home buyers. They’re usually the broke ones so I’m an expert at getting people into homes with little to no money and I have your answer! No, you can not gift any money to your buyer but you can do the Nehemiah Program. You basically pay a small fee (About 1%) to Nehemiah (a 501c3 corp) and they take your money and “gift” it to the seller. This “middle man” is allowed by FHA and, in my eyes, it allows you to give money directly to the buyer in a round about way for a small fee. It’s a great program. They say that the buyer needs 1k of their own money but they don’t require them to spend it. YOu can do Nehemiah to cover their 3% downpayment AND you can give up to 6% to cover their closing costs! So, I’ve done deals where a buyer gets into a house for literally NO money with a FHA loan. check out their website and call a lender who’s done it before (they have a list, and we mortgage brokers who close a lot of deals with them get our name on their list). If you, by chance, are in Florida let me know! I think the trick is to find a mortgage broker who really really likes to deal with lower income/no money/somewhat battered credit clients and they’ll help you get those buyers into homes (your homes!). SO many lenders just don’t like to “deal” with a client who isn’t perfect.
Do your buyers have nothing? What about taking a car as a downpayment or something?
If the full nature of the financial transaction is concealed from the lender then yeah – you could be looking at fraud. Why not just finance your buyer yourself through a lease-option/land-contract/pac trust or whatever else is currently in vogue?
Re: (?) Getting the Down Payment for Your Buyer - Posted by Eric Jessen
Posted by Eric Jessen on July 26, 2001 at 08:43:24:
Kim,
Thank you so much for the infomation!!! I’ve never heard of the Nehemiah program. It sounds like it might be just the thing I’m looking for. Also, one of the respondants mentioned a Ship program. I don’t know what that is. I would love to speak with you in person or by phone. I am in the Tampa/St. Pete/Clearwater area of Florida. How can I reach you? Please let me know…I am busting to get started and I need a lender just like you. Thanks again.
Posted by Sherry (FL) on July 26, 2001 at 24:57:39:
Hi,
I am in Florida and been having a hard time getting buyers financed. I used the Nehemiah program on one house and the Ship program on the 2nd house. I think that is a good way to sell my homes quicker, because my problem is holding time.
That’s funny that you’re in Florida - the odds were against us. I’ve emailed you privately with my number. I did want to answer the SHIP question so that those reading will know what it means. Kiersten gave a good overview too. SHIP stands for State Housing Initiatives Partnership. Each county or city is given “SHIP Funds” from the state – atleast they do in Florida. Each county and/or city can make up their own guidelines to give this money out. Some have CRAZY rules. Most have some simple guidelines --live in the house for 10 years or pay the money back, have atleast 1k invested, not make more than the median income for their count, go to a home ownership seminar etc etc. So, if you hear of SHIP funds they are referring to a housing initiative in their area. Most funds are around 5000 but I’ve seen it range from $3500 to $10,000. I personally think $10,000 is ridiculous - but I don’t make the rules! Look into the program in the area your house is in and use that as a GREAT marketing tool. Oh - buyers have to be FHA buyers (typically) and there’s usually a cap on the maximum sales price.
Look into the program in the area your house is in and use that as a GREAT marketing tool. Oh - buyers have to be FHA buyers (typically) and there’s usually a cap on the maximum sales price.