michaelson, connor
& boul, inc.
5312 Bolsa Avenue, STE 200
Huntington Beach, CA 92649
Phone: (714) 230-3600
FAX: (714) 230-3699
Broker/Agent Handbook
A Guide to Selling
HUD Homes
Version 10/28/03
Table of Contents
|
Selling
HUD Homes ……………………………………………………………………. |
2 |
|
Important
Information about HUD Homes…………………………………….……… |
3 |
|
HUD’s “AS-IS” Policy……………………………………………………...…….. |
3 |
|
Access to the
Property…………………………………………………....…….. |
3 |
|
Repairs,
Improvements, or Occupancy Prior to Closing……………...…….. |
3 |
|
Broker
Registration……………………………………………………………....…….. |
4 |
|
Property
Listings……………………………………………………………........…….. |
5 |
|
Financing
Categories…………………………………………………………....…….. |
6 |
|
Electronic
Bidding – How to Place a Bid……………………………………....…….. |
7 |
|
8 |
|
|
Electronic
Bidding – Important Information…………………………………....…….. |
9 |
|
Placing
Bids……………………………………………………………......…….. |
9 |
|
Overbidding with FHA
Financing………………………………………...…….. |
9 |
|
Bidding for
Investors……………………………………………………....…….. |
9 |
|
Listings with a Deadline of “Daily”……………………………………....…….. |
9 |
|
The
Sales Package……………………………………………………………...……... |
10 |
|
Errors and
Omissions……………………………………………………..……... |
10 |
|
Sales Contract 9548 (1/99) Line by
Line………………………………..……... |
10 |
|
The Sales Package - Addenda…………………………………………. ……..……... |
13 |
|
After
the Contract has been Signed…………………………………………....…….. |
14 |
|
Obtaining Appraisals and Termite
Inspection Reports………………..……... |
14 |
|
Turning on
Utilities………………………………………………………...……... |
14 |
|
Adding and Removing
Purchasers……………………………………...……... |
14 |
|
Changing
Financing……………………………………………………….……... |
14 |
|
Extension Requests……………………………………………………….……... |
15 |
|
Re-keying the Property after
Settlement....................................................... |
15 |
|
Cancellation
of Bids, Accepted Offers, and Ratified Contracts……………..……... |
16 |
|
Disposition
of Earnest Money Deposits………………………………………..…….. |
17 |
|
Transactions
Step by Step……………………………………………………...……... |
18 |
|
MCB Contact Information………………………………………………………..…….. |
19 |
|
Prior to Placing a Bid Checklist………………………………………………....…….. |
20 |
|
|
|
About this Handbook
This handbook is to be used
for Brokers and Agents working with Owner Occupant and/or Investor Purchasers.
This document may be revised in the future.
It is your responsibility to check for updates and/or revisions of this
document on our website: www.mcbreo.com. The latest Version date of this handbook is
printed on the cover and bottom left of each page; all previous versions are obsolete.
This Handbook does not include information on HUD’s special programs
such as Officer Next Door, Teacher Next Door, Firefighter Next Door, EMT Next
Door, Government, and Non-profit Sales. Some of the content of this handbook will not
apply toward these special program sales.
What is a HUD Home?
When someone with a Federal
Housing Administration (FHA) insured mortgage can't meet the payments, the
lender forecloses on the home; FHA pays the lender what is owed; and then the United
States Department of Housing and Urban Development (HUD) takes ownership of the
home. Then HUD sells it at market value as quickly as possible. Michaelson,
Connor & Boul Inc. (MCB) is a Marketing and Management contractor for HUD 1
to 4 unit residential properties. MCB
maintains and sells these properties in accordance with HUD guidelines.
How are HUD Homes
Sold?
HUD homes are listed on the
MLS and on the internet. Registered
brokers and agents may place bids electronically on these properties on behalf
of a purchaser. The bid with the highest
net to HUD is selected as the provisional winner subject to receipt of all
required documents.
Who can buy a HUD
Home?
Any individual who can
qualify for a mortgage or who can pay cash may purchase a HUD home. Purchasers must use a broker or agent who is
registered with HUD to place a bid on a property. Purchasers must also have a pre-qualification
letter from a lender or proof of cash funds in the amount of or greater than
the property they are purchasing.
Who can sell a HUD
Home?
Any licensed real-estate agent or broker who is registered with HUD may show and submit bids on HUD Homes. Please be sure to register with HUD PRIOR to working with a prospective purchaser.
Important Information about HUD Homes
HUD’s “AS-IS”
Policy
All HUD homes are sold strictly
“AS-IS”, this includes the responsibility of the purchaser to de-winterize the
property. HUD does not make any
repairs. There are no representations or
warranties, expressed or implied, on any HUD property. HUD does not guarantee the condition of any
property, FHA-insurable or not, nor whether it meets local codes or zoning
requirements. Brokers should advise
purchasers that there may be code and/or zoning violations on these properties
and that it is the responsibility of the purchaser to identify these
violations. Buyers are encouraged to have homes inspected by a qualified home
inspection company to satisfy themselves as to the condition of the property at
the time of sale.
Access to the
Property
Owner Occupant
and Investor purchasers MUST be accompanied by a broker or agent when
viewing any HUD home listed for sale. Buyers may not enter a house without
their broker/agent for any reason prior to closing. If there are difficulties gaining access to a
property please contact the local Broad Listing Broker. Lists of local broad listing brokers may be
found at www.mcbreo.com - click on your state and then “Announcements”.
Brokers and/or
agents must accompany any individual performing services such as home
inspections, appraisals, or certifications.
Brokers and agents may only use their keys for their own legitimate use. Keys are not permitted to be lent to any other
individuals associated with any sales transactions.
Repairs,
Improvements, or Occupancy Prior to Closing
No work is to be
done to ANY HUD property prior to the close of the transaction. An accepted bid
is NOT a transfer of ownership. Purchasers do not own the home until it
is recorded in their name. Purchasers may not use the home for storage of
personal items or occupy the premises under any circumstances.
Occupying or working on
a HUD home prior to the close will be treated as trespassing. Failure to
abide by this policy can result in the cancellation of the sale transaction,
forfeiture of the earnest money deposit and may also involve suspension of
bidding privileges for the selling agent and brokerage firm.
In order to register your
company to place bids on HUD properties you will need to complete and submit
the following documents:
*IF YOU ARE AN AGENT YOU WILL NEED TO HAVE THE BROKER IN
CHARGE COMPLETE THIS APPLICATION BEFORE YOU CAN BID ON ANY HUD PROPERTY
If
you are a broker registering with a Federal Tax ID/Employer ID Number (FIN/TIN)
you will need:
3.
IRS FORM W-9-Request for Tax
Payer Identification (if you are a
broker registering with a tax id number/employer id number.)
4. First page of a telephone bill, utility bill or
bank/trust account statement showing the business address
5. Copy of the Designated Selling Brokers State Real
Estate License
Note: A copy of the pocket card/continued education card
is required if you are in the states of OH, NC & SC
If you are an individual broker registering with a
social security number you will need:
3. First page of a telephone bill, utility bill or
bank/trust account statement showing the business address
4. Copy of the Designated Selling Broker’s State Real
Estate License
5. A copy of the Designated Selling Broker’s State-issued
Identification card or driver's license
6. A copy of the designated selling broker’s social
security card
Note: If you are unable to locate your
social security card you can submit IRS Form W-9 in place of a social security
card.
You will need ADOBE ACROBAT
READER to view and print these forms on the internet. They may also be found at http://www.mcbreo.com/forms.htm
FOR BROKERS REGISTERING WITH
A FEDERAL TAX ID/EMPLOYER ID NUMBER (FIN/TIN): Note: If your company has been assigned a Federal Tax ID
number you are required to use that number to register
Upon
completion, send applications via OVERNIGHT mail to MCB California office: 5312 Bolsa Ave. Suite 200 Huntington Beach, CA 90803
Attention:
NAID Coordinator
For further assistance
please call (714) 230-3600 or E-Mail naid@mcbreo.com
To locate property listings
go to www.mcbreo.com then choose your
state on the left-hand side, then click on property listings, then choose your
city.
Listing Example:
CITY
|
Address |
Zip |
Case Number |
List Price |
Bd/Ba |
I/U |
Sq Ft |
Year |
|
123 HUD St. |
11111 |
263-000000 |
$80,000 |
3/1.5 |
IE |
1400 |
1925 LBP |
|
Listing Date: 04/12/02 |
Deadline: Daily |
Bid Opening: Daily-Owner Occup. |
|||||
|
“AS-IS” value: $12,000 |
Escrow Amount:$ 440 |
|
|||||
Address and zip code: Property
Address and zip code.
Case
Number: This is the FHA Case number. This number should be used to reference HUD
properties. When faxing documents to MCB
please be sure to label all pages with the specific case number.
List Price: This is the current list price of the property.
I/U: Financing
types: This is the FHA insurability of the property.
- IN = Insured
- IE = Insured with Repair Escrow
- IC = Insured with Conditions (such as system
check)
- UI = Uninsured
Sq Ft: Square feet of the property.
Year: Year the
property was built. If the property was
built prior to 1978 a Lead Based Paint Addendum will be required as part of the
sales package.
Listing Date: Original list
date of the property.
Deadline: The last day you can place bids by 11:59 PM.
Bid
Opening: Date the bids will be
opened - all winning bids are posted by 4pm EST. This line will also indicate if a property is
currently available for owner occupant bids only or all purchasers.
“AS-IS” Value: The FHA “AS-IS” Appraised value.
Escrow
Amount: If the property is IE – this
is the amount of the repair escrow. This
is the repair amount plus the 10% contingency.
IN – Insurable
– 203(b)
·
Properties listed
IN appear to qualify for FHA 203(b) financing.
There should not be any MPS repairs necessary.
IE – Insurable with
Escrow – 203(b) Repair Escrow
·
Properties
listed IE are eligible for FHA financing with repairs to be completed by the purchaser
after the close of escrow. These repairs must be Minimum Property
Standard (MPS) Repairs totaling less than $5,000. MPS Categories include; roof, structure, and
mechanical systems, such as plumbing, electric, and heating. A listing posted inside the property will
indicate actual repair amounts.
·
The cost for the
repairs is not paid by HUD; however,
the buyer may finance the repair escrow amount in their mortgage. The lender is
responsible for inspections of the repairs and authorizing release of funds.
·
On the purchase
agreement the repair escrow amount is not deducted from the Net to HUD or added
to the purchase price on line 3. The
repair escrow amount should only show on line 4.
·
REPAIR ESCROW
ONLY APPLIES TO FHA FINANCING – not cash or conventional transactions.
UI – Uninsurable
– Conventional, Cash, or 203(k)
·
Properties
listed UI generally are in need of extensive repairs and are usually purchased
with cash or conventional financing. The
only type of FHA financing they may qualify for is a FHA 203(k) loan. 203K FHA financing is a rehabilitation loan
for owner occupants purchasing properties that have over $5,000 dollars worth
of MPS repairs. Not all UI properties
will qualify for FHA 203(k) financing.
Electronic Bidding – How to Place A
Bid
Bids MUST be submitted electronically
either by telephone or through the internet. Have your HUD Sales Contract 9548
(1/99) and all necessary addenda filled out completely prior to submitting a
bid on a property.
Bidding on the
internet
To
submit bids via internet, go to http://www.mcbreo.com
and choose your state.
1. Click on "Property Listings" button.
2. Select the City from the City Index.
3. Have your completed HUD sales contract 9548 (1/99) in
front of you as the line numbers below refer to it.
4. Click on the "Submit a Bid" just below the
selected property.
5. Enter Brokers Federal Tax ID or SSN
·
Enter Purchase
Price from line 3
·
Enter Financing
Arrangement from line 4
·
Enter Closing
Costs from line 5
·
Enter Selling
Agent Commission from line 6a
·
The Type of
Purchaser from line 8
Purchaser Information - The purchaser’s full name, SSN, and address
are required in order to submit a bid.
If a company is purchasing the property the company name, FIN, and
address are required in order to submit a bid.
1. Enter the Primary
Purchasers Social Security Number or Federal Identification Number.
·
If the SSN/FIN
on the bid does not match SSN/FIN on the contract YOUR BID WILL BE CANCELED.
2. Enter Purchasers Last Name
3. If a company is purchasing the property enter the company
name.
4. Enter the Purchasers First Name
5.
All
Purchaser/Company information must be accurate and match the Sales Contract
or your bid will be cancelled.
Enter the Purchasers
Address
6. Enter the Purchasers City
7. Enter the Purchasers State
8. Enter the Purchasers Zip Code
9. Enter the Purchasers Email
This information
will be used to contact the Broker/Agent by fax and E-mail.
Broker/Agent Information
10. Enter
agent/broker phone number
11. Enter
agent/broker fax number
12. Enter Agent
Name
13. Enter Agent
E-mail Address
IMPORTANT NOTE: If you are posted on the
internet as the accepted bid you must over-night mail your Sales Contract
and addenda to MCB within 48
hours.
Electronic Bidding – Regulations
Accuracy of Bid Submission
The purchaser information
entered on the bid must be accurate. If
a generic social security number, federal identification number, purchaser, or
company name is used in lieu of the actually SSN/FIN, purchaser, or company
name your bid will be invalidated. The
information entered on your bid cannot be changed after it has been provisional
accepted. Submission of false
information will result in cancellation of the provisional bid acceptance and
the property will be placed back on the market for competitive bidding.
Multiple Owner Occupant Bids
Owner Occupant purchasers
may only have one accepted offer at a time.
If for some reason
the provisional bid or contract for an Owner Occupant must be cancelled, you
will not be able to submit another Bid on behalf of that owner occupant until MCB
has processed your cancellation request. Upon completion of processing a cancellation
letter will be faxed stating the disposition of the earnest money deposit. Submission of Bids during this transition
period will only cause delay in your client’s ability to place a new Bid.
Accepted Bids
If your bid is accepted you
are responsible for presenting the original signed sales contract to Michaelson
Connor & Boul within 48 hours.
Therefore, you must have your Sales Contract and addenda including your
purchaser’s pre-qualification letter or verification of cash funds for a cash
sale prior to submitting your bid. If
your sales package is submitted incomplete your bid acceptance may be
cancelled.
Electronic Bidding – Important
Information
Michaelson Connor & Boul
reserves the right to accept or reject any and all bids, and assumes no
responsibility for any inadvertent errors in the listing information. MCB is
not responsible for errors or equipment failures that may occur in the
electronic transmission of bids.
IMPORTANT NOTE: Once a bid is accepted you may not change the purchase price,
closing costs, or commissions whatsoever.
Any change will negate the initial offer and result in cancellation of
the transaction.
Placing Bids
Bid results will be posted
daily by 4:00 PM Eastern Standard Time.
If you place your bids prior to 4:00 PM you may be bidding on a property
that has already been awarded. Therefore
your bid will not be considered. To
avoid this it is suggest that you wait until after 4:00 PM Eastern Standard Time
to place bids for your client.
Over-Bidding with
FHA financing
If your purchaser is
obtaining FHA financing you will be required to use HUD’s FHA AS-IS Appraisal
(unless HUD’s Appraisal is over 6 months old, in this case your purchaser will
be required to obtain a new FHA AS-IS appraisal at their cost). Therefore, if you overbid the appraised value
and your purchaser is obtaining FHA financing, the purchaser must pay the
overbid difference in cash. This is
because FHA will not insure a loan for greater than the appraised value of the
property.
Bidding for
Investors
For the first ten (10) days
on all new listings, preference is given to owner occupant buyers. Baltimore City has an extended Owner Occupant
Period of 20 days. Bids by investors
will not be considered until the final day of the Owner Occupancy Period.
Listings with a
Deadline of “Daily”
Bids are reviewed on the
following Business Day after they are submitted. If a listing has a deadline of “Daily” you
must submit a bid by 11:59 PM. The
winner (if there is an acceptable offer) will be posted the following day by
4:00 PM.
IMPORTANT NOTE: Bids submitted on Friday, Saturday, or Sunday on
properties listed Daily will be reviewed on Monday (the following Business
Day).
Contract Documents must
reach MCB within 48 hours after the internet posting of bid results. The successful bidder MUST submit a completed
sales package by OVERNIGHT MAIL, which consists of the following:
1. Sales Contract – HUD form 9548 dated 1/99
2. Copy of Earnest Money check.
3. Forfeiture and Extension Policy - Version 3/31/03
4. Broker’s Agreement to Abide by HUD’s earnest money
forfeiture policy
5. Lead Based Paint Addendum - if applicable.
6. Owner Occupant Certification – HUD form 9548D (1/98)
-if applicable
7. Pre-qualification letter or for cash sales provide
verification of funds.
Please Note: New versions of addenda may be available. Please check the website (www.mcbreo.com) for Announcements or new
forms.
Send these documents by overnight
mail to:
Michaelson, Connor & Boul, Inc.
5312 Bolsa Avenue, STE 200
Huntington Beach, CA 92649
Errors and
Omissions
If your contract package
contains any errors or omissions your bid may be cancelled and the property
placed back on the market. Please be
careful when filling out the contract and addenda and be sure it is complete
and correct.
1.
Sales Contract – HUD form 9548 (1/99):
Line by Line
Electronic Version: You may download and use the electronic version of
this form as long as the “Conditions of Sale” is signed by all buyers, and you
do not make any copies of the PDF contract (you must used the one from the
Printer).
Ø
Line 1 – Complete
the Purchaser(s) name(s) and Address of the property including City, State, and
Zip Code. Fill in the HUD case number in
the designated box and write the confirmation number above the box. These Contracts are not assignable. The Purchaser whose social security number was
used in the bid must appear on the contract.
Ø
Line 2 – Fill
in the purchaser(s) name and legal style.
The HUD closing agent will prepare a deed to transfer ownership
according to this line. This line may not be left blank or “to be
determined”.
Ø
Line 3 – Enter
the purchase price (the bid price) and Earnest Money deposit. Deposit checks must be written out to the
brokerage and must be in the selling broker’s possession PRIOR to placing a bid.
Earnest money deposits should be in the form of a certified check,
cashier’s check, or a money order.
o Sales price up
to $49,999 earnest money deposit =
$500
o Sales price $50,000
and up earnest money deposit =
$1,000
o Vacant Lot: ½ of the purchase price of the property.
Ø
Line 4 –
Financing Type
o If your purchaser is applying for FHA Financing
§
Property listed
IN: 203(b)
§
Property listed
IE: 203(b) with repair escrow
·
Add the repair
escrow amount where the contract states: “Said
Mortgage involves a repair escrow amounting to $__________”
·
ONLY IF THE
PURCHASER IS OBTAINING AN FHA 203(b) REPAIR ESCROW LOAN – do not fill in an
escrow amount if the purchaser is paying cash or getting a loan not involving
FHA.
§
Property listed
UI: 203(k)
·
If the property
qualifies for 203(k) financing.
o Non-FHA financing
§
Purchaser is paying cash or applying for
conventional or other financing not involving FHA.
§
If purchaser is
paying cash please circle the word cash and be sure to include in your package
a verification of funds.
o Please
leave all other mortgage information BLANK
§
down payment,
mortgage amount, and months
Ø
Line 5 –
Closing Costs up to 5% of the purchase price.
o Closing costs can be found on page 2 of the Forfeiture
and Extension agreement.
Ø
Line 6a –
Selling agent commission up to 5% of the purchase price.
Ø
Line 6b –
Broad Listing Broker commission up to 1% of the purchase price. (Some BLB commissions may be lower than 1%).
Ø
Line 7 –
Net to HUD – line 3 minus lines 5, 6a, and 6b.
Please be sure your math is correct on this line.
Ø
Line 8 -
Purchaser type: Investor or Owner Occupant. Misrepresenting a purchaser as an Owner
Occupant is a SERIOUS offense that
may constitute fraud and may result in an investigation of the Broker, Agent
and Purchaser by the office of the Inspector General. Leave Discount amount blank. (Discounts for
OND/TND and Non-Profit purchasers only)
Ø
Line 9 -
Sales transactions shall close not later than 60 days from seller’s
acceptance. Properties may close in less than 60 days but 60 days MUST
be on the contract. If closing does not
occur by 60 days then extension fees will apply.
Ø
Line 10 – Back-up
offers – Does not apply – you should only send in a Sales contract package if
you are the accepted bidder. Contract
packages received that are not the awarded bidders will be discarded without
notification.
Ø
Line 11 -
If the property was built prior to 1978 please mark line 11 “is” attached. Always mark that other Addendum “is”
attached, every contract package must also contain the other required
addenda.
Ø
Line 12 – HAVE PURCHSER(S) INITIAL CONTRACT HERE-
Please double check that ALL purchasers have initialed this box before
sending the contract package.
Ø
Line 13 –
Purchaser information: Please be sure all information is written in the correct
boxes.
o Type or print name.
o SIGNATURE(S) – All purchasers’ signatures are required. Contracts
that are received without the purchaser’s signature may be cancelled
immediately and placed on the market.
o Social Security Number or EIN/FIN for ALL purchasers.
o Purchaser’s address, and phone number.
o Date Contract was signed.
o DO NOT have purchasers sign in the “Seller” box or the
“Authorizing Signature & Date:” Box.
This is to be used by the authorized HUD signing agent ONLY.
Ø
Certification of Broker
o Broker’s Name and business address
o Broker’s EIN or SSN#
o Signature of broker – Broker (or individual given
written permission to sign as the broker, such as an office manager)
§
SIGNATURE STAMPS are not allowed.
o Broker’s Phone Number with Area Code.
o Agent’s Full Name.
o Agent’s Phone Number with Area Code.
2. Copy of Earnest Money Deposit
A copy of the money order or
certified check is a required portion of the sales package. Earnest Money is held by the Selling
Broker. A copy of the deposit slip of
the Earnest Money into the broker’s account is also acceptable.
Sales price up to $49,999 earnest money
deposit = $500
Sales price $50,000 and up earnest
money deposit = $1,000
These
amounts are not negotiable.
3.
Forfeiture and Extension Policy –
version 3/31/03
This form is an explanation
of forfeiture and refund of earnest money deposits for Owner Occupants and
Investors. Acceptable closing costs and extension of closing date request
guidelines.
Please
be sure this document is read and signed by all purchasers.
4.
Broker’s Agreement to Abide by HUD’s
Earnest Money Forfeiture Policy – Version 1/26/98
This document MUST be signed
by the BROKER not the agent or an individual authorized in writing to sign on the
broker’s behalf. Signature stamps are
NOT ALLOWED.
5.
Lead Based Paint Addendum
If the property was built
prior to 1978 this addendum is required.
Please fill out both pages and be sure the Certification of Accuracy is
signed.
6.
Owner Occupant Certification - HUD
form 9548D (1/98)
Required for all Owner
Occupant Purchasers – must be signed by all purchasers and the Broker, not the
agent – Stamp signatures are not
acceptable.
7.
Pre-Qualification Letter or Proof or
Funds for Cash Sale
A Letter of Commitment or a Pre-Qualification
Letter - from an industry recognized bank or mortgage underwriter. For cash sales, provide verification of cash funds. This can be a bank statement, letter from a
bank, or other forms or verifications that provide evidence that cash funds
will be available.
After the Contract has been signed by an HUD Authorized
Agent
After the Sales Contract has been ratified it will be faxed and mailed back
to the agent/broker along with the closing agent instructions sheet. This will identify HUD’s Designated Closing
Agent for the transaction and the expiration date of the contract. If you cannot close by the expiration date
you MUST submit an extension request PRIOR to the expiration of the contract.
Requesting
Appraisals and Termite Inspection Reports
FHA As-is appraisals and termite inspection reports are available by
Lenders request. To request an appraisal
and/or termite inspection report the lender must complete the Appraisal and Termite
Request Form located at www.mcbreo.com
by choosing your state then HUD FORMS and fax it to (714) 230-3699.
Turning on
Utilities
After the sales contact has been ratified it is strongly recommended
that a home inspection be performed with the utilities on. In order to activate the utilities please
complete the “Request to turn on Utilities” form located at www.mcbreo.com by choosing your state then HUD FORMS. Please fax this completed form to MCB for
authorization. This form will be faxed
back to you and you may use it to activate utilities in the property for a
period of 72 hours.
Adding or Removing Purchasers
You may add or remove a purchaser if absolutely necessary. This can be done by printing the “Addendum to
ADD Purchasers” or “Addendum to REMOVE Purchasers” from our website. Please have these forms completed and signed
by all purchasers. These should be faxed
to (714) 230-3699.
Changing Financing
If financing must be changed you must complete and submit the “Addendum
to change financing” form from the website.
If you are changing from an FHA 203(b) to a 203(b) with Repair Escrow or,
if you are increasing a repair escrow amount, you must attach the home
inspection report showing the required repairs.
If you are changing to 203(k) rehab financing, you must attach a 203(k)
HUD Plan review completed by a certified 203(k) consultant. These should be faxed
to (714) 230-3699.
Approval or Denial of Addendums to the
contract is entirely within the Seller’s discretion.
MCB may grant extension of closing dates in 15-day increments upon
written request. Extensions of time to
close the sale are entirely within the Seller’s discretion. An extension request must be submitted to HUD’s designated Closing Agent PRIOR to the expiration of the
contract. All extension requests must
include the following:
- Extension
Request Form (can be found on the internet)
- A letter from
the Lender
·
Must establish
the cause of the delay.
·
Must state when
the closing will occur.
- Extension Fees
Purchase price
$25,000 or less $150 ($10 per day)
Purchase price
$25,001 to 50,000 $225 ($15
per day)
Purchase price $50,000
or more $375 ($25 per day)
Extensions will be for a period of fifteen (15)
calendar days.
Ø Extension fees will be retained by the seller if a
closing doesn’t occur.
Ø At the closing, extension fees will be prorated as of
the date of closing. Unused fees will be
refunded to the purchaser.
Ø The granting of one extension shall not obligate the
Seller to grant additional extensions, and the Seller shall declare a Default
for the Purchasers’ failure to close the sale upon the expiration of the original
closing period or upon expiration of the extensions.
Ø Extension requests must be filed regardless of the nature
of the delay of settlement. Purchase
agreements must be kept current to avoid expiration of the closing date and
possible cancellation of the contract.
If there is a title problem preventing closing, or if the closing agent
is causing the delay, an extension must be filed by the agent. If extensions are not kept current and the
contract expires, the transaction will be cancelled.
Ø Extensions filed after the expiration of the contract
will not be considered.
Ø CONTRACTS
WILL BE CANCELLED ON THE DATE OF EXPIRATION IF AN EXTENSION HAS NOT BEEN FILED.
Re-Keying the Property after
Settlement
Purchasers should be advised that they are responsible for re-keying the
locks of the property immediately after settlement for their own security.
Cancellation of Bids, Accepted
Offers, and Ratified Contracts
Cancellation requests will be reviewed and processed within 72 hours of
being received. MCB will respond with a
cancellation and the disposition of the earnest money deposit.
Cancellations of Bids Prior to Acceptance
If you place a bid by mistake or made an incorrect bid please print and
complete the “Bid Cancellation Prior to Acceptance” form from the website. If we do not receive your cancellation
request and your bid is posted as the accepted bid, you must fill out the “Bid
Cancellation After Acceptance”.
Cancellations of Bids After Acceptance
If your offer has been posted as the winning bid and you would like to
cancel please print and complete the “Bid Cancellation After Acceptance” form from
the website. This should be completed
and signed by the purchaser.
Cancellation of Ratified Contracts
If the contract has been ratified and the purchaser cannot close the
transaction you must submit a typed cancellation request on your company
letterhead. This request should contain
the following:
q
All Cancellations must be faxed to: ATTENTION: SALES
DEPARTMENT FAX NUMBER: (714) 230-3699.
Case number
q
Property Address
q
Purchaser(s)
Name
q
Agent’s Name
q
Reason for the
Cancellation
o
As detailed as
possible
q
Purchaser(s) Signature (REQUIRED)
q
Supporting
Documentation for Cancellation
o
Agent/Broker
Explanation
o
Inspection
Reports
o
Lender Letters
o
Etc…
Disposition of Earnest Money Deposits
The failure by a purchaser to close on
the sale of property within the allowable time period, including any granted
extensions, will result in the forfeiture of the entire earnest money deposit,
except where the purchaser presents documentation to HUD that one of the
special circumstances described in paragraph (B) below this section has
occurred.
A.
Investor Purchasers:
1.
The failure by
an investor to close on an uninsured (not involving FHA) sale will result in
forfeiture of the entire earnest money deposit.
2.
Fifty percent of
the earnest money deposit on an FHA-insured sale will be returned to an
Investor Purchaser where HUD (or a Direct Endorsement Lender using HUD
guidelines) determines that the Purchaser is not an acceptable borrower.
B.
Owner Occupant Purchasers:
1.
The entire
earnest money deposit will be returned to an Owner-Occupant Purchaser who fails
to close after the sales contract was signed due to:
·
There has been a
death in the immediate family (contract holder, spouse, or children living in
the same household).
·
There has been a
recent serious illness in the immediate family that has resulted in significant
medical expenses or substantial loss of income, thus adversely affecting the
purchaser’s financial ability to close the sale.
·
There has been a
loss of employment by one of the primary breadwinners, or substantial loss of
income through no fault of the purchaser.
·
In the case of
an FHA-insured sale HUD (or a direct endorsement lender using HUD guidelines)
determines that the purchaser is not an acceptable borrower.
·
For other good
cause, to be determined by MCB.
2.
In the case of
an uninsured (not involving FHA) loan where, despite good faith efforts by the
purchaser, there is an inability to obtain a mortgage loan from a recognized
mortgage lender, 50 percent of the earnest money deposit will be returned.
3.
On either type
of sale, forfeit 100 percent of the deposit on those instances where no
documentation is submitted, where the documentation fails to provide an
acceptable cause for the purchaser’s failure to close, or where the
documentation is not provided within a reasonable time frame following contract
cancellation.
TRANSACTIONS STEP BY STEP
Prior
to listing:
1.
Lender deeds
property to HUD
2.
Property is
inspected and secured by MCB
3. Trash out completed
4.
Appraisal
performed
5.
MCB determines
price
6.
Property is
listed on the MLS and on the internet
After property is listed:
7.
Real estate
agent shows property to buyers
8.
Real estate
agent completes sales package with purchasers
9.
Real estate
agent submits a bid
10. Bids opened by MCB
11. Bid acceptance posted on internet
After
an accepted offer:
12. Earnest money deposited with real estate broker
13. Sales Package is sent via overnight mail to MCB
14. If sales package is complete and correct, sales
contract is signed forwarded to HUD’s designated closing agent with a copy to
the Real Estate Agent.
After
a ratified sales contract:
15. Open escrow or
closing process initiated at title/closing agent company
16. Buyer secures
financing
17. Purchaser(s)
perform a home inspection
18. Sale closes at
title company
19. Purchasers re-key
the locks.
Main Office
5312 Bolsa Ave., Suite 200
Huntington Beach, CA 92649
Phone: 714-230-3600
Toll Free: 888-622-7361
Fax: 714-230-3699
All Sales Contracts and addenda must be
sent overnight mail to the Main Office in California.
Field Offices
Maryland
10400 Shaker Dr., Unit F
Columbia, MD 21046
Phone: 410-772-5800
Fax: 410-772-2299
Michigan
1844 Thunderbird St.
Troy MI 48084
Phone: 248-273-0041
Fax: 248-273-0042
Ohio/West Virginia
26250 Euclid Ave., Suite 513
Euclid,
OH 44132
Phone: 216-289-1575
North Carolina
5736 North Tryon St., Suite 104
Charlotte, NC 28213
Phone: 704-599-1512
Fax: 704-599-1812
South Carolina
5001 Sunset Blvd., Suite B
Lexington, SC 29072
Phone: 803-996-2944
Fax: 803-996-2945
PRIOR TO PLACING A BID *****CHECKLIST*****
Date: _________________ Agent:
__________________________
Case Number:
__________________ Phone #:
________________________
Property Address: ________________________________________________
Please complete and check
off all of the following prior to submitting a bid:
q
Original Sales Contract – HUD form 9548
dated 1/99 (PDF or Carbon)
q
(If PDF contract is used it may not be photocopied –
you must complete the PDF contract that
comes directly from the printer.)
q
Line 1 – All
Purchasers on Contract
q
Line 2 – Title
Name(s) & Style (individuals taking title)
q
Line 3 –
Purchase Price
q
Line 4 – Check
Financing type – FHA financing must match listing type
§
IN = 203(b)
§
IE = 203(b)
Repair Escrow (also fill in amount of escrow)
§
UI = property
may qualify for 203(k) financing
§
All properties
may be financed with Conventional Financing
q
Line 5 – Closing
Costs may not exceed 5% of the purchase price
q
Line 6a –Selling
Commission not to exceed 5% of the purchase price
q
Line 6b – BLB
Commission will be 1% (or less) of the purchaser price
q
Line 7 – Net
Amount - Line 3 minus lines 5, 6a, and 6b
q
Line 8 – Type of
ownership (owner occupant or investor)
o OWNER OCCUPANTS must occupy the property for 12 months
and have not purchased a HUD HOME as an Owner Occupant within the past 24
Months.
q
Line 9 – Closing
Date must be 60 Days
q
Line 11 – Lead
Based Paint Addendum must be attached if property was built prior to 1978
q
Line 12 – Purchaser must Initial
q
Have Purchaser(s) Print Name(s) and Sign
q
Include all Purchaser’s
Social Security number’s, current place of residence, phone number, and
date of offer
o Social Security Number MUST match the purchasers
Social Security number submitted on the bid.
q
Broker
Information including office address, broker
signature (not a stamp) Tax ID number, Agents Name, and Phone number
PRIOR TO PLACING A BID
- Page 2 *****CHECKLIST*****
FORMS AND ADDENDA
q
Copy of Earnest Money Deposit check
o Sales price up to $49,999 earnest money deposit = $500
o Sales price $50,000 and up earnest money deposit =
$1,000
q
Forfeiture and Extension Policy - Version 3/31/03
o Must be read and signed by all purchasers
q
Broker’s Agreement to Abide by HUD’s Earnest
Money Forfeiture Policy
o Broker MUST sign – Stamps are not allowed
q
Lead Based Paint Addendum - if the home was built prior to 1978
o Must be signed by all purchasers and the Broker or Agent
q
Owner Occupant Certification – HUD form 9548D dated 1/98
o If purchaser
is an Owner Occupant
o OWNER OCCUPANTS must occupy the property for 12 months
and have not purchased a HUD HOME as an Owner Occupant within the past 24
Months.
o Misrepresenting a purchaser as an Owner Occupant is a
SERIOUS offense that may constitute
fraud and may result in an investigation of the Broker, Agent, and purchaser by
the office of the inspector general.
q
Pre-Qualification or Pre-Approval letter from a lender.
If this is a cash sale:
verification of cash funds
Over-Bidding with FHA financing
If your purchaser is
obtaining FHA financing you will be required to use HUD’s FHA AS-IS Appraisal
(unless HUD’s Appraisal is over 6 months old, in this case your purchaser will
be required to obtain a new FHA AS-IS appraisal at their cost). Therefore, if you overbid the appraised value
and your purchaser is obtaining FHA financing, the purchaser must pay the overbid difference in cash. This is because FHA will not insure a loan
for greater than the appraised value of the property.