How will 100% consumer financing change your game in 2015?

12 Replies

On March 2, BBVA announced 100% financing for consumers in low to moderate income areas. They are also willing to help out with up to $4,500. While I haven't seen the program's full details, I'm certain they will have heavy qualifying guidelines (hopefully). 

I'm 38 this month and attending the wedding of my best friend, also 38, this weekend. He's never owned but lives in Los Angeles where even low-income inventory in his area starts in the mid $300,000s. A down payment is a HUGE hurdle for he and his fiance. They are both very responsible and would make great homeowners, it's the down payment in their market that has them stuck.

I posted this on Facebook and got lots of feedback on the NOW generation spending too much money on non-asset-backed items and experiences. Will a program like this, for "responsible" and "qualified" buyers, make a huge dent in your business in 2015? 

Keep in mind, even during the downturn, the VA no-down program was the TOP performing portfolio. Thoughts? I'm optimistic but also a little frightened.

"According to BBVA Compass, the subject property must either be located in a low-to-moderate income census tract (as determined by the Federal Financial Institutions Examination Council) or the loan applicants cannot have an income greater than 80% of the median income for the area, per the guidelines"

http://www.housingwire.com/articles/33120-bbva-compass-launches-zero-percent-down-mortgage-program

Sounds great for those who invested in low income housing areas don't think Los Angeles would have areas your friend would want to live in

@Aaron Norris  That monthly payment for the 300k is close to LA rent so it should be ok moving forward and actually represent a monthly expense savings at some point. 

Both LA County and LA City have programs for moderate income folks. They go to some weekend home owner classes and they can get up to $60,000 in down payment assistance. The new buyer still has to kick down around 20k usually to make it work. These types of programs are needed and the default rate I believe is extremely low. 

@Matt R.  I wasn't aware of that. I haven't seen those in a while in the Inland Empire area. Do you have a link where I can send that to them?

@Aaron Norris  I was not aware of it either until I bought a car off someone and after talking to him he was moving in the 400k townhouse next door for 20k out of pocket. That was out in Valencia. I will try to look it up online for you.

thanks,

@Aaron Norris  

http://www3.lacdc.org/cdcwebsite/linkit.aspx?id=58...

Funds are available! 

@Steven Picker I was looking on your site and there are still quite a few areas in the moderate to low income range. I've never seen the site so it was interesting to see. A bit un-user freindly. 

I can speak to this topic in depth. In our current market in Tuscaloosa AL, USDA has approved 100% financing since the Tornado in 2011. You should see a massive increase in home owner activity and interest in purchasing. Typically about once a month, I will post a Facebook Ad detailing the high points of the program and I typically receive about 100 comments/messages in about 2 hours. 

This will greatly increase your ability to expand your clientele. 

Wow @Forrest Atkinson  , they keep the program going? How long do you think they will keep it up?  Do you see younger individuals and families getting off the fence because of the no-down program or buyers in general?

The USDA office has given no official date for the ending of the program. @Aaron Norris  

I probably closed ten transactions of young people/families under the age of 24 using this program.

It impacts everyone to be quite honest. It mainly helps people who have good credit, but no money for a downpayment. 

@Aaron Norris  no down option has been available forever...  It's called seller and lender credit :) You just need an agent and loan officer who know what they're doing.

I've heard of it in theory but haven't seen anyone get one through. Have you seen a lot of these in Socal? @Ewa Reza  ?

I do these sometimes myself @Aaron Norris  

But I wouldn't do this for every client. It takes a lot of work to close deal like that and if it's a high maintenance client, I wouldn't bother.

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