FANO $ Still Available for Your New Orleans Clients, but...

The Finance Authority of New Orleans (FANO) still has tons of money to give to first time home buyers to help them get into the New Orleans real estate market and out of the high-priced rental market. There are so many incentives for the program in addition to the federal housing tax credit.

However, as I have begun working deals with the FANO program (and watching some of them fall apart), I am realizing that the program's restrictions make it a tough road for the Realtor and lender who deal with it. Here's a few of the challenges that, if you can get through them, will lead your qualifying clients to a dream come true.

1. The income qualification are quite low, though they have been raised recently. When a client does qualify using those numbers, then that extrapolates into a very inexpensive house for the New Orleans market. Often, those homes get snapped up since we are not experiencing quite the down turn here as so many other markets are.

2. The time to close one of these deals can be 8 weeks and that by itself often makes an offer less attractive. The positive side to relate to sellers is that to qualify for the program, the buyer has to be pretty solid on their first mortgage application.

3. Preference is given to buying a home in "opportunity zones". These zones are often areas that clients do not want to live in, or where this is widespread blight (and some of the blight pre-dates Katrina). There is a silver lining in that there is a smaller pool of money available for homes outside the zones that can prove a requires minimum in Katrina damage.

4. The documentation required is staggering. While we all know that the whole "no-doc" thing was a serious mistake, but this program is a step toward the other extreme.

5. There are a limited number of lenders who are approved to apply on behalf of the client for the program. Be kind to those lenders, remembering that it is an even worse experience for them than it is for the Realtors or even the clients. The lenders make their money on the FIRST mortgage, which can be $65k plus down payment less than than the asking price used to calculate commission for the Realtors, and the price of these houses are pretty low to start. Understandably, some of my preferred referrals in the lending world will not touch these.

Prepare your buyers beforehand. Prepare the seller and listing agent beforehand. As long as the program is not a surprise to anyone involved in the deal, there's not been a problem negotiating acceptance of these offers. The key is to educate yourself, then educate the other players and keep the lines of communication open.

More information on the program is available at www.financeauthority.org.