Freeport, NY · Member since 2015 · 4 posts · 0 votes
Hello everyone,
I'm a real estate agent from New York. I work equally with buyers and sellers. This past month a past rental customer called me and said she was looking to buy a house. She proceeded to tell me that she's using NACA for the purchase. Great right? Wrong.....I was just able to get scheduled for a workshop to introduce me to the program which is next week but in the meantime, they viewed a 2 family home and want to submit an offer!!! None of the agents that I know are familiar with the program. My broker told me to try to find her a different program but they want to use NACA. So here goes....... I really just need some guidance , advice etc about the process. We got a home insurance quote already but is there anything else I or they need to do? How about agency? Do I need to act as a Buyers Agent? This is going to be interesting : ) Any help is appreciated.
Btw....she has a point of contact but it takes over a week to get a response. I would love for this to work out for them but in the back of my mind it seems more like a trial run to prepare to successfully close a deal using the NACA program somewhere down the line.
Investor · Buffalo, NY · Member since 2016 · 100 posts · 71 votes
9y
Chris Mason you might benefit from actually understanding how NACA works. The people who give up and leave the program do so because they get frustrated or simply aren't organized enough to act as their own Processor. A lot of the problems I've seen are simply the result of lack of proper staff training and failure to communicate realistic expectations to the clients.
There is only one workshop where you learn about the program and one other workshop to teach these first time homebuyers about realtors and looking for houses. The "months" that these people spend in the cycle are used to write letters explaining their credit issues (this happened, I got behind, won't happen again) and working through any items that an underwriter might or is questioning, and making sure the borrower is sustaining on a budget that allows savings.
This is a financial overhaul for some people. It's completely foreign to everyone going through the program and there aren't clear road maps to follow since every single purchase has different issues.
This isn't a scam or a trap, it's an amazing program where the staff is just not managed appropriately.
I successfully completed NACA and am helping 4 of my friends go through the process now.
Investor · Buffalo, NY · Member since 2016 · 100 posts · 71 votes
9y
@Charlie MacPherson - You may be correct. NY has discrimination laws that include source of income. There used to be a NACA executive that posted on BP messages, I'm trying to remember who that was. I'd like to get their input because this is a pretty serious issue. I agree with @Phil G. that the NACA approval letter only raises more questions and encourages discrimination.
Investor · Buffalo, NY · Member since 2016 · 100 posts · 71 votes
9y
Tim Trumble is the NACA Online Operations person who posts on BP. I can't tag him here because we aren't connected.
I'm not by any means a lawyer or a housing law expert, but I found this:
The Fair Housing Act (Title VIII of the Civil Rights Act of 1968) introduced meaningful federal enforcement mechanisms. It outlawed:
Refusal to sell or rent a dwelling to any person because of race, color, religion, sex, or national origin.
Discrimination based on race, color, religion or national origin in the terms, conditions or privilege of the sale or rental of a dwelling.
Advertising the sale or rental of a dwelling indicating preference of discrimination based on race, color, religion or national origin.
Coercing, threatening, intimidating, or interfering with a person's enjoyment or exercise of housing rights based on discriminatory reasons or retaliating against a person or organization that aids or encourages the exercise or enjoyment of fair housing rights.
I'm wondering if NACA borrowers are protected because the discrimination by realtors/sellers is towards NACA not the actual borrower.
Just so everyone is aware, I do routinely monitor Bigger Pockets and will chime in when I feel it's appropriate. As such, any questions that are specifically for me can be posted here and they will definitely find their way to me.
We are certainly aware of the situation of which you write. As most of you already know, NACA is an extremely detailed and thorough process. Long story short, we have in the past had occasional issues with taking longer than anyone (including us) was comfortable with to get a loan closed. As a result, the hesitation has mainly originated from realtors who were not willing to wait for the deal to close under our exacting standards.
We have actually addressed this issue over the last year, making several steps to streamline our process, but never to the point of compromising our values. Our target timeline is now 28 days from contract to closing and 16 days from submission of the actual bank application to closing, and the vast majority of loans are closing within that timeline. The only things that are holding up files at this point are if there is a challenge to the appraisal amount, which can add about ten days to the process, or (more commonly) things simply being backed up at the bank because of the volume of loans we are sending them right now.
With regard to a possible violation of the Fair Housing Act, I'm by no means an attorney either, but I did speak with one of our attorneys a few months ago on the topic of refusing a NACA loan being possible discrimination. Since refusing the loan because they are afraid of how long it may take is not actually an act of retaliation against NACA, it would not meet the law's definition of discrimination.
It stinks, it's not fair, but it's not illegal, even though it should be. As long as you have a legitimate source of funding, a seller shouldn't be able to refuse to sell to someone just because they happen to not like the source or have heard negative gossip about it. But until a rejected buyer sues a seller over the issue and wins, they can get away with it.
For now, the best defense is to point out that a NACA Qualification Letter is in fact a much more reliable source of funding since it has already been approved by an underwriter as opposed to the bank's pre-approval letter that is little more than a guess at what the buyer can afford. You can also show the our 28 day Contract to Closing Timeline which is pages 23 through 27 of the presentation at:
IMHO, I don't think rejecting a NACA offer would constitute a violation of law, at least in the states I'm licensed in or based on federal statute. First, NACA is at its heart conventional financing offered by CITI or BOA. The NACA letter isn't actually a pre-approval letter. NACA loans still have to be underwritten by the lender. So NACA letters only really promise that they THINK that the buyer will be qualified by the lender. And finally, sellers have every right to turn down an offer based on down payment amount. Sellers decide every day that they don't want to deal with the hassle of selling to a buyer with FHA or USDA financing.
Can someone tell me what NACA stands for so I can add it to the abbreviation list?
Also, I see almost zero benefit to the seller for using this program. I don't know anything about it, but from what is here, it sounds like a ton of hassle with no reward. Can anyone share benefits for a seller to accept an offer with this?
Mindy the benefit for me is that I was able to sell properties in areas that not many home owners were buying in.. and they actually closed the loans.. these were rental dominated areas.. also the buyer as stated got one heck of an interest rate at the time the Naca office would only recommend to their folks sellers who would buy down interest rates. and being an OREO and wanting it off the books and selling it for top of market I was only to happy to do it.. but it was a process no doubt and of course that was Jackson MS .. I am sure each market is different.
Carley, I think as sellers we can refuse to sell based on where fundings is coming from.. Like some sellers will reject offers from those wanting VA loans.. I personally will not .. I think we owe it to our veterans.. But I will reject offers from anyone using Quicken loans to buy my new construction.. they are horrid to work with as a seller... Same with wells fargo I need to be careful with them as well.. they never hit dates etc.
The thing that may cause an offer with a NACA loan to be refused by the seller is the same thing as with USDA or VA loans - there's zero down payment.
I had a USDA offer turned down this morning for the same reason - the seller feels that the buyer doesn't have enough skin in the game. If the buyer was to find the *perfect* home tomorrow, they could walk away and lose only their $500 deposit.
The seller is faced with putting his now stigmatized home back on the market.
Stinks for the buyer? You bet. Illegal? Nope.
PS - thanks for your input Tim. Nice to hear from you.
Investor · Buffalo, NY · Member since 2016 · 100 posts · 71 votes
9y
@Tim Trumble - I completed NACA and am currently helping 4 of my friends through the process. I have found that the Rehab portion of the loan is what slows down the process by WEEKS. At the time of the home inspection, no one tells the buyer they should have their chosen General Contractor present to prepare a bid for the work identified by the home inspector. Getting a bid done separately can be delayed by over a week while you wait for the home inspection, then the contractor will need 1-2 weeks to prepare the bid, hopefully there's no delays getting the seller to give access, and FINALLY the appraisal has to be done. That takes another 1-2 weeks AFTER WHICH yet ANOTHER appraisal generally has to be done (subject to the repairs) to determine how much loan the buyer will qualify for (110% subject to value). If there's still room for wish list items, that could slow the process down even more with additional bid time, etc. That schedule, even if everything moves along as expected, is SIGNIFICANTLY longer than 28 days to close. My estimate is that needing a rehab loan (and all of the homes I'm working with need it) adds about 3-6 weeks EASILY to the closing date. During that time, no one is updating the sellers or providing a real idea as to the actual timeline of the loan. Everyone keeps moving toward this artificial date that NACA has attached to the file, without adjusting for delays, and there is no management of expectations, which just makes everyone frustrated and generates more negativity toward NACA.
Regarding the process itself, it is not clearly communicated to the buyers by NACA that THEY are responsible for making sure their loan keeps moving - long after the MC has completed their portion and directed their attention to new applicants. None of the people I am working with were advised to review their Lender Conditions from the web access. Relying on the MC to remember to look at your Lender Conditions (on average once a week), results in even further delays.
There is also not sufficient training provided to the MCs and their response of "NO" to everything they are unfamiliar with causes unnecessary frustration because at that point the NACA employees become the obstacle to homeownership. I can't tell you how many times I've had to take a NO to a basic request and DIG to find out the real reason for the denial only to find there was a simple solution that changed it to approval. It shouldn't be a battle but it often is because the only person who cares about the loan closing is the borrower - who are generally uneducated and unequipped to navigate the poorly documented NACA buying process.
I have CLEARLY given this a lot of thought and analysis. I would be more than happy to talk to you offline if you feel that such a discussion would actually be beneficial and could make an impact on the way the process works.
The loan program is amazing. The NACA process needs some work. I'm willing to help make it better if I can.
Do you think NACA would be a good option for someone who has excellent credit and a good job...or is the program mostly for those who have had credit challenges in the past? Is the process easier/quicker for a borrower with their finances/credit in order?
Also, regarding the Owner Occupancy requirement: If I get a NACA mortgage and later have a life-changing circumstance such as transferring to another city for a job, having more children and outgrowing the house, or something else happens where I can't live there anymore...what do I do then? I hope to live in the house long-term but 4, 5, 10 years in the future it's hard to know where I'll be.
What happens if I move out of the house and, for whatever reason, I'm not able to refinance it into a non NACA mortgage?
Investor · Buffalo, NY · Member since 2016 · 100 posts · 71 votes
9y
@Aaron L. - I have excellent credit and a good job. I'm a forensic CPA. The program has no income limits or credit score requirements.
If you move out of the house, NACA requires you to refinance. If you're not able to refinance, how would you be moving? I know that there are some circumstances where you can apply for a waiver of the condition. @Tim Trumble would need to give you more specifics.
Investor · Atlanta, GA · Member since 2015 · 366 posts · 283 votes
9y
Jay Hinrichs what is an OREO property?
Aaron L. I went to a NACA training/mtg 2 years ago in Detroit. I didn't qualify bc I wasn't a first time home buyer but went on behalf of a family member - a veteran and first time homebuyer with good credit/income. Based on the questions asked in the mtg, most of the folks in the room wouldn't normally be able to buy a home due to lack of credit or downpayment.
NACA is an amazing opportunity for any buyer - prob the best thing out there other than a VA loan: no downpayment, super low interest rates, no PMI BUT you have to have the patience of a saint and superior organizational skills to navigate their process. If you don't mind waiting 3 mos to get into a house, give it a try.
In my situation, the follow up call from NACA to BEGIN processing the file to enter their program came the week he was moving into a property purchased with a VA loan - just way too slow for someone who has a set timeline for when they have to move. If you have the time, patience, and flexibility, though, I think NACA could be great
@Aaron L. - I have excellent credit and a good job. I'm a forensic CPA. The program has no income limits or credit score requirements.
If you move out of the house, NACA requires you to refinance. If you're not able to refinance, how would you be moving? I know that there are some circumstances where you can apply for a waiver of the condition. @Tim Trumble would need to give you more specifics.
Most lenders won't do a refinance unless I have 20% equity in the property. If I have to move in a couple years I might not have much equity...especially with a zero down loan. I would have to bring my own money to the table in order to sell or refinance unless the property appreciates a lot. I just don't want to get stuck with a 100% financed house that I can't get out of if, for some reason, I need to move on.
Aaron L. I went to a NACA training/mtg 2 years ago in Detroit. I didn't qualify bc I wasn't a first time home buyer but went on behalf of a family member - a veteran and first time homebuyer with good credit/income. Based on the questions asked in the mtg, most of the folks in the room wouldn't normally be able to buy a home due to lack of credit or downpayment.
NACA is an amazing opportunity for any buyer - prob the best thing out there other than a VA loan: no downpayment, super low interest rates, no PMI BUT you have to have the patience of a saint and superior organizational skills to navigate their process. If you don't mind waiting 3 mos to get into a house, give it a try.
In my situation, the follow up call from NACA to BEGIN processing the file to enter their program came the week he was moving into a property purchased with a VA loan - just way too slow for someone who has a set timeline for when they have to move. If you have the time, patience, and flexibility, though, I think NACA could be great
Hey, I'm not a first time home buyer either. On NACA website it only says you (or anyone who plans to live in the house) can't own any property at the time of purchase. If you don't currently own property or if you haven''t had a NACA mortgage within the last 3 years, it doesn't look like you would be rejected...
Are you sure you don't qualify just because you've previously owned a house?
Kansas City, MO · Member since 2015 · 123 posts · 46 votes
9y
@Carley M. With your excellent credit score, were you able to bypass the normal credit approval process on NACA's website? I read some stuff about them verifying any late payments, 12 months of rent receipts, etc.
I could easily qualify for a non NACA loan...if so, can they just pull my credit and approve me?
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
9y
@Ericka G. OREO is Other real estate Owned meaning foreclosure.. I was a lender I foreclosed Naca buyer was buying my home.. I would say the process took at least 6 months and a lot of work with the naca office plus I had to buy down the rate of course that was in some pretty tough times and the naca office new they had us over the barrel.. they were doing right by the client.. but many who try naca simply cannot stay on track and do just the basic house keeping that they need to do.. so as a seller your wasting your time dealing with anyone who is not fully approved and has their voucher..
but agreed its an exceptional program for those that qualify no aruguement there we don't have it in Oregon.
Escrow Officer · Ewing, NJ · Member since 2017 · 35 posts · 16 votes
9y
@Carley M. - what a wealth of knowledge you are! I actually attended a NACA workshop to get a first hand feel for what people were looking for. I love what NACA is trying to do for these potential first-time homebuyers although, I agree, there is a bit of disorganization on the back-end and the inability to set realistic expectations. However, if the right prospect comes with the right intention and can follow the program through, WOW! Thanks for posting about the Section 8 piece as well. I had sought out that answer for a co-worker and actually never got any follow-up.
@Susan Maneck - How beautiful an exit strategy! It's sad that some people are standing right on the threshold of a life changing event, like buying a home and saving 750 a month, but cant see the forest through the trees.
Escrow Officer · Ewing, NJ · Member since 2017 · 35 posts · 16 votes
9y
At the event I attended in Willingboro, NJ they told us that you could not have interest in another property while you have a NACA mortgage so I understood that to mean that I would need to refi and sell, but they mentioned nothing about "first-time only." Matter of fact, one of the presenters retold a story of a man selling to a relative and using NACA to get the second home....
In reading their workshop booklet, it appears that they not only look at your current credit items but also want you to pay (or negotiate payment) on closed and charged off accounts. It explains that this is done so that these items are added back to your credit at a later date allowing for possible lawsuits/liens (or just looming debt obligations) etc. Is this common practice with a regular lender?
Investor · Buffalo, NY · Member since 2016 · 100 posts · 71 votes
9y
@Lana G. - From my experience, NACA is only concerned with the last 12 months. They make you write letters of explanation, but I haven't had them require past due accounts be negotiated or repaid. Could be that they were small accounts, I don't know. @Tim Trumble would have to answer that for you.
@Aaron L. - I had to go through the same process, but it didn't take as long because there wasn't a lot of explaining or clean-up work for me. Getting to loan submission ISN'T the delay, it is the rehab estimates and the back and forth with the Bank underwriters who request documents from NACA and then wait .... and wait .... because the MC has long since put away your file since he already submitted it to the bank. I have a friend that is 2 weeks from their original closing date (which I tried to tell him was a bogus date, not adjusted for delays) and had to have docs submitted TODAY or his loan would be denied. His MC is on vacation and no one from the office is calling him back. His loan isn't dead. It will have to be resubmitted, but this is another delay. He will be lucky to close in September - which sucks because he has 3 kids (2 entering high school) and they're switching to a new school district with the move.
Investor · Atlanta, GA · Member since 2015 · 366 posts · 283 votes
9y
Aaron L. You're correct, if you don't own any other properties, you can still qualify for NACA. I interpreted as a program for those new to the home buying process but now that you mentioned it I do recall them saying you can use their services if you've owned before as long as you don't own anything currently.
Kansas City, MO · Member since 2015 · 123 posts · 46 votes
9y
@Carley M. wow, sounds like a lot of paperwork and waiting. I'm hoping to find a house that doesn't need any repairs and therefore avoid the rehab back & forth.
Now that you've had your NACA mortgage for awhile, how much volunteering is required? The website said 5 times a year but it wasn't too clear on the time commitments or what type of work you'd have to do.
Again, thank you for taking the time to answer my questions and the questions of the others on this thread.
Investor · Buffalo, NY · Member since 2016 · 100 posts · 71 votes
9y
Aaron L. - they sometimes send emails asking for volunteers, but telling people about NACA, referring people to the program, etc counts as volunteering. No one keeps tabs.
Watertown, CT · Member since 2017 · 1 post · 0 votes
9y
Don't use NACA.
First and most important to buyers: NACA holds a second lien of $25,000 to keep the property owner-occupied. Second: NACA is extremely negligent/misleading in pointing out the risks of this lien to buyers (most of whom are first-time) and says in their handbook "However, these requirements will not prevent you from selling your house for a profit, refinancing your house, or purchasing other property while continuing to live in the house purchased with a NACA Mortgage."(pg.37)
Property values can drop. Jobs or other circumstances might require moving and then you will be stuck, unable to sell, refinance or rent out your house.
Kansas City, MO · Member since 2015 · 123 posts · 46 votes
9y
@Sidney N. Hi Sidney, thanks for your comment — I hear what you're saying and I asked a similar question in one of my above posts.
It sounds like NACA's vision is for buyers to live in the property longterm. But what happens if you have a job change, your family grows (added children, etc.), you have a job transfer, etc? My plan is to live in the house longterm (or else I wouldn't be looking at NACA), but what do I do if I have to move and I'm unable to refinance? Are there any exceptions to the owner-occupancy rule in the case of unforeseen circumstances?
Also, can you explain how the $25k lien works? If I pay NACA $25k then can I rent out the house? Is there ever a time when the lien is removed?
With the reduced interest rate and the opportunity to buy down the rate, I will be paying off the principal quickly and gaining equity, but property values may drop (as Sidney said), or I may not be able to live in the home as long as I anticipated.
@Carley M. maybe you can offer your thoughts on this?
@Tim Trumble Are you able to shed any light on these questions? I think these are important considerations for anyone considering NACA. If I have to move, and I don't have the equity to refinance or sell (and I'm prohibited from renting out the property), I may end up in a position where I'm totally stuck...
New to Real Estate · Bronx, NY · Member since 2017 · 4 posts · 0 votes
8y
Hello all Im not sure if this is the correct place to place this posting, however I am already NACA qualified and am searching for a real estate agent in the NYC area (Bronx, Brooklyn specifically) who is familiar with the NACA mortgage process. I would like to start my search immediately.
Charlotte, NC · Member since 2013 · 48 posts · 26 votes
8y
Hello ,
Unfortunately, is reading way to much into the owner occupancy requirement of the NACA program. The requirement and the lien exist for the purpose of preventing property investors from abusing the NACA program. You are absolutely correct that we are focused on long-term ownership, as long as the home is appropriate for you, as part of our objective of community stabilization.
With regard to your question of "what happens if you have a job change, your family grows (added children, etc.), you have a job transfer, etc.", you are free to sell or refinance after three years of ownership. This of course removes the lien since the owner occupancy requirement and thus the lien exist for the duration of the time you have the NACA loan.
We will not accept a $25,000 payment to remove the lien just so the home can be turned into a rental property. This would violate the very purpose of the occupancy requirement and lien.
In the case of unforeseen circumstances, simply get in touch with us and let us know the situation and how you wish to proceed, along with information to support the case. The occupancy requirement and lien are a policy designed to support our mission, not a jail sentence. When and where warranted our CEO or National Director of Underwriting can grant a waiver on a case by case basis.
