Government And County Programs

As we all know, loans are harder and harder to get these days. If you have a buyer with great credit and 20% down, things are still peachy keen. However, if you have buyers that are purchasing for the first time or don't possess sterling credit, odds are you will have to deal with some sort of government program. By government program, I mean things like FHA, CalHfa, VA, CalVet, County Down Payment Assistance Programs, etc.

While these programs are great in giving buyers options they might not otherwise have, they present their own particular set of difficulties. Over the past year I have had numerous dealings with these programs and I can tell you from experience, they are never easy. Just when it seems like everything is smooth sailing, whamo, a new condition or hurdle pops up that threatens to derail the whole process. We all know how bureaucracies function and that's what these programs are mired in. Red tape and confusion abound. If you can find someone who can give you a straight answer instead of a maybe, consider yourself lucky.

For instance, I had a couple buying their first home using a CalHfa loan earlier this year. I couldn't believe the hoops they made these people jump through. The wife has a job that allows her to work from home and the husband is a computer genius who designs websites and can work remotely from his home office. The people made the wife get letters from her boss, HR Department, and others stating that yes, indeed, she was really able to work remotely. Not such a big deal, except they made her do it unexpectedly smack dab in the middle of the process. Then, the couple had a nice car that they were leasing. The people doing the loan decided the car payment was to high and told them they had to get rid of the car. So, my clients had to pay 1,000's of dollars to get out of their contract and give back the car. Guess what? Then they told my client's that even though they had gotten rid of the car, they would need another one at some point and so they were going to leave the cost of the car they had gotten rid of on their negative balances. What? So they were being penalized for a car they no longer owned. My clients actually had to go and purchase a cheap car they didn't want to get the higher phantom payment off their record. A 30 day escrow rapidly turned into a 60 day escrow. Luckily for us, the seller had a child support lien come up that he had to satisfy or else my clients would have been paying the seller for every day the house went over the 30 day escrow period.

I am dealing with a couple now who are on a Down Payment Assistance program with the County. Same thing. Nothing but red tape and numerous conditions to deal with. Nobody at the County can ever give us a straight answer on anything. My clients received a call from their lender one night and were informed that they were required to attend a County class on buying a house as a condition of getting the money. One catch, the class was 100 miles away and if they didn't show up in the morning, it would be another month before it was offered again. The County keeps losing the paperwork or demanding more things they forgot to ask for. We are faxing them papers over on a daily basis. They sent us a letter three weeks ago stating that they have decided they have to inspect the house themselves before they will give us approval to draw docs. They still have not done the inspection and nobody can tell us what is going on. Now it sounds like they probably aren't even going to do the inspection and we should be able to draw docs early next week. Headaches galore.

If I have learned one thing from all of this, it is to ask for a longer escrow period anytime you are dealing with one of these loans. An extra two weeks may be the difference between a smooth transaction and a huge mess. Be aware that your clients are going to have to jump through more hoops than a circus pony and make sure they are aware of this fact. Loans that are approved one day can be snatched away without warning the next. Never expect a straight answer and even if you get one, be suspicious. The DMV has nothing on these guys.

Originally Posted On www.bigbearilluminated.com