Real Estate Agent Familiar with NACA Process

Buying & Selling Real Estate
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Real Estate Agent Familiar with NACA Process

Karen Kingston
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.

Thanks

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Carley M.
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.
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  • Chris MasonPro Member
    Moderator
    Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
    9y

    Do not make this client your #1 priority if they are using NACA.

    I've only dealt with NACA "refugees." Typically what I see is they've been screwing around with workshops and guru seminars and MLM crap for 3 or 9 months and nary a preapproval in sight, they're done with it and want to actually buy a house, I connect with them, they get preapproved in under a week, and they go out and buy something right away. By then, frequently, it's also 2 or 3 real estate agents later. If it isn't, they've still had to string that real estate agent along for those 3 or 9 months.

    But then I also see positive reviews online from people indicating that they were preapproved and sent out house-hunting on a normal timeline. I'm not sure why some people get recruited into the guru/workshop/MLM pipeline, and others are good to go like normal. It's not like these people I see 3 or 9 months later typically actually had anything that takes that long to fix. It's truly bizarre, why do you need to spend months on guru/workshop/MLM stuff if you've got the down payment, credit, and income???? Just go buy a house!

    All in all the refugees are great for me as a lender to pick up and run with because they are typically DONE wasting time by that point at which they are speaking with me (in general, the more incompetent the competition is, the better it is for me :P ), but for you as an agent with no idea how early into that drawn out process they are (and of course they still want to go look at a million homes even though they aren't actually ready to write an offer...) it can be a terrible waste of time, which is your most valuable asset. 

    2Reply
  • Karen Kingston
    OP
    Freeport, NY · Member since 2015 · 4 posts · 0 votes
    9y

    Thanks Chris,

    I appreciate the insight.  I definitely don't want to waste my time or theirs for that matter so I will definitely keep that in mind.  I think a regular mortgage is the way to go!!!!

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    9y

    @Chris Mason  its much like section 8 only for mortgages.. they must have their voucher in hand and ready to go . if they are starting the program it takes months and there is a huge fall out becasue so many simply can't get their act together.. I have sold 2 properties of mine through Naca.. program  think of Acorn on steriods poorly run poorly orginaized and lots of back room deals.

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  • Christopher Phillips
    Real Estate Agent · Garden City, NY · Member since 2016 · 3k+ posts · 1k+ votes
    9y

    @Karen Kingston

    Have they gone through the workshops and have been qualified? Or are they just starting? It can take 6-12 months or more to become NACA qualified.

    0Reply
  • Karen Kingston
    OP
    Freeport, NY · Member since 2015 · 4 posts · 0 votes
    9y

    @Christopher Phillips 

    Yes they've done the workshops already.  I'm supposed to do a webinar next week to get more familiar with the process.

    0Reply
  • Carley M.
    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.
    5Reply
  • Carley M.
    Investor · Buffalo, NY · Member since 2016 · 100 posts · 71 votes
    9y
    Karen Kingston call the office manager for the local NACA office and she can give you the basics to help your client until you can get to the webinar. We brought in a new realtor in the middle of a house search and they got her up to speed very quickly.
    2Reply
  • Charlie MacPherson
    China, ME · Member since 2014 · 3k+ posts · 4k+ votes
    9y

    @Carley M. I've just gone through the 2.5 hour webinar and registered as an agent.  One thing they didn't address is whether buyers can use Section 8 funds to buy a home.

    Everything I've ever heard says no. I asked NACA both by text and a phone call and they have said yes both times.

    I'm having a hard time believing that.  It really seems too good to be true, but if it is, there are a lot of people I can help.

    Any experience that you could share?

    0Reply
  • Carley M.
    Investor · Buffalo, NY · Member since 2016 · 100 posts · 71 votes
    9y
    Charlie MacPherson i am a newly appointed section 8 monitor and am currently researching NACA involvement with the Section 8 program. I know that section 8 funds CAN be used to pay the mortgage through the NACA program, but the question I am currently researching with the PHAs is whether or not the participant can purchase a multifamily or if they can only purchase single family homes with the funds. This question literally came up during my monitoring this past week and it's on my calendar to look into tomorrow. I will update this post with the guidance I find.
    0Reply
  • Charlie MacPherson
    China, ME · Member since 2014 · 3k+ posts · 4k+ votes
    9y

    @Carley M. That's fantastic!

    I have a huge list of Sec. 8 renters who have expressed an interest in owning a home.  Up until now, I've never had a tool to help them.

    Please let me know what you find out on the MFRs.  That would put home ownership within reach for even more people.

    0Reply
  • Carley M.
    Investor · Buffalo, NY · Member since 2016 · 100 posts · 71 votes
    9y
    Charlie MacPherson tell your section 8 people that they need to tell the PHA that issued their voucher that they are interested in the Family Self-Sustainability (FSS) program and the Homeownership program. They have to go through additional financial counseling to ensure they will be successful as homeowners. Section 8 funds also provide a cash allowance for regular maintenance (Buffalo's program offers .5% of the purchase price per year, paid over 12 months) and up to 2.5% of purchase price per year paid in monthly amounts for larger repairs. Each jurisdiction has flexibility with this so your area may be different as to what allowances are provide.
    1Reply
  • Charlie MacPherson
    China, ME · Member since 2014 · 3k+ posts · 4k+ votes
    9y

    @Carley M. Thanks VERY much for that info.  It will be a great help!

    1Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    9y

    @Carley M. I sold two of my properties that i owned through Naca in Jackson MS> Naca does fund they basically shame BOA into making loans to these folks.. seller has to buy down rate.. its an incredible program really if the buyers and naca can get on the same page.... what I found was the NACA office and staff was totally disfunctional.. and there in MS the buyers were financially and business savvy challenged to the max... but once through the program and cert in hand .. and they don't F it up they do close.. not sure on the section 8 question but I have my doubts.... because people do get booted off of section 8.. its not a life long right.. although many do it for their life tax payers basically paying for their living expenses for their entire life.. but those are social issues we can't solve

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  • Carley M.
    Investor · Buffalo, NY · Member since 2016 · 100 posts · 71 votes
    9y
    Jay Hinrichs the seller doesn't HAVE to buy down the interest rate. Without any buydown, mine was only 3%. They do not "shame" is the banks into funding the mortgages, they are an activist organization that won lawsuits for predatory lending practices against these banks, which are now required to lend in neighborhoods where they have banking branches. Sounds reasonable to me. The NACA staff are ill-trained and disorganized, which makes the process harder to navigate but not impossible. There are a lot of hoops to jump through but the cost savings for me was about $40k and worth the additional task burden (as compared to traditional financing where the bank handles all of paperwork processing. This is the best program out there and makes home buying possible for many people who otherwise couldn't. I am hoping that these issues with the staff are growing pains and that NACA management gets a handle on the issues soon, but I'm not holding my breath.
    4Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    9y

    @Carley M.  In Jackson it was a must to buy down the rate.. I had to buy it down to 1.25% for the buyer.. the insurance monthly was more than the mortgage payment LOL.. granted great deal.. but I did this in 09 and they were dysfunctional then.. and they are dysfunctional now.. and they did shame the banks into this just look at how they picketed the sub prime lenders mansions etc... call it what you want thats what they did.. I think every market is different of course and i wholeheartedly agree that for the borrower this is a great deal no argument there.

    You just have to play the cards that are dealt you..  I had to literally wine and dine the ladies at naca to have them recommend the buyers even look at my properties.. its was extortion at applebee's  LOL... its OK I sold two of my OREOs in the worse market imaginable and for top dollar even with the 10k buy down.. 

    I don't see the buy down viable in most markets now with the lack of inventory and market changes sellers just wont go for it. thats why you paid 3% as opposed to the buyers that bought from me paid 1.25% for their money.

    I think in the semi depressed markets that are still out there this works in hot markets no one is going to want to fool with Naca and their dysfunction.

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  • Susan Maneck
    Investor · Jackson, MS · Member since 2014 · 1k+ posts · 769 votes
    9y

    I'd really like to know more about this because my dream 'exit strategy' has always been to turn my tenants into home owners. Right now it is hard to imagine being able to do this with most of them. I just got another call from one of these 'rent-to-own' furniture places asking if so-and-so is my tenant. Mind you, these people are renting a property from me that has two houses and are paying $1500 a month rent. If they would just get their act together I would sell that property to them for 80K and they'd be paying half that much in on their mortgage. But they would rather rent furniture. <sigh>

    But I have another tenant with a HUD voucher, but who pay most of the rent themselves. This is a disabled couple and I'm getting premium rent from them because I built them a ramp. HUD just upped their portion of the rent and I'd like to get them in on that Family Self Sustainability Program.

    In Jackson rents are much higher than mortgage payments. 

    1Reply
  • Mindy JensenPro Member
    BiggerPockets Money Podcast Host · Longmont, CO · Member since 2014 · 7k+ posts · 10k+ votes
    9y

    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?

    @Jay Hinrichs and @Carley M. ?

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  • Karen Kingston
    OP
    Freeport, NY · Member since 2015 · 4 posts · 0 votes
    9y

    @Carley M.

    Thanks for the suggestion to the local NACA office. I called and I am waiting for a supervisor call back. I have his name and extension so I'll stay on top of it.

    I definitely agree that the program is disorganized. I tried promoting this program years ago and had at least 5 buyers sign up online. I also sent in paperwork to get NACA referrals. NOONE ever got back to me or my customers...needless to say we just didnt use the program. I was hoping that things had improved somewhat.

    If you can only get the program to flow it is really good for buyers. I had a tenant who moved from a 3BR apartment into a home using NACA and literally was saving about $300 paying her own mortgage vs paying my rent!!

    @Mindy Jensen

    NACA stands for "Neighborhood Assistance Corporation of America"

    0Reply
  • Chris T.
    Investor · Downers Grove, IL · Member since 2015 · 1k+ posts · 955 votes
    9y

    @Mindy Jensen

    NACA = Neighborhood Assistance Corporation of America

    www.naca.com

    I'm selling 1 of the house to a NACA preapproved buyer now. 3.5% loan to the buyer, zero closing costs to the buyer AND seller.

    We'll see how it goes.....

    This is from the preapproval letter.

    "The above buyer(s) have been working with the Neighborhood Assistance Corporation of America ("NACA") and are qualified for the NACA Mortgage to purchase the above property. NACA is the country's largest HUD certified non-profit organization providing the Best in America Mortgage with every buyer receiving the following terms: no down payment required, lender pays all the closing costs, no application fees and qualification is based on the buyer(s) documented payment history not their credit score. Everyone receives the same terms and a conventional below market thirty year fixed rate. NACA has special agreements with Bank of America and Citi Mortgage to fund these mortgages with billions of dollars in commitments. Virtually all NACA Qualified buyer(s) applying for a mortgage through NACA are approved. Everyone including sellers and real estate agents, especially those who say NACA's extraordinary program sounds too good to be true, should visit our website at: www.naca.com for more information.

    NACA has reviewed the buyer's financial and credit information and worked with them to address any issues that might impede approval of their mortgage application. NACA has reviewed their credit information from all three credit bureaus, employment history, wages, assets, liabilities, and verified that the buyer(s) can afford the monthly mortgage payments at the offered price at NACA's current below market interest rate. Thus, the buyer(s) meets the NACA mortgage criteria for the identified property.

    Because of NACA's extensive counseling and evaluation, this letter is virtually the equivalent of having the buyer's mortgage approved. It is much more reliable than a pre-approval by a lender or real estate agent due to the comprehensiveness of the NACA program, and NACA's special relationship with the participating financial institutions. Virtually all NACA Qualified buyer(s) who apply for a mortgage through NACA are approved as long as the property appraises at the purchase price. If the property requires repairs or renovation, the costs for such work can be included in the mortgage amount.

    "

    1Reply
  • Carley M.
    Investor · Buffalo, NY · Member since 2016 · 100 posts · 71 votes
    9y
    Mindy Jensen My understanding is that NACA pays for title and survey for the seller if the seller agrees to use NACA (or its vendor) for the title company.
    1Reply
  • Carley M.
    Investor · Buffalo, NY · Member since 2016 · 100 posts · 71 votes
    9y
    Charlie MacPherson - Section 8 can only be used to purchase a single family home or single unit within a co-op or similar multi family building.
    0Reply
  • Alan Dominijanni
    Rental Property Investor · Hartsdale, NY · Member since 2017 · 2 posts · 0 votes
    9y

    Hey @Carley M. You are a wealth of information on NACA! For the past several months I've been jumping through hoops for the program though I see a light - as my loan file was submitted to underwriting this week.. after which I should finally find out how much I'll be approved for a 4 family home.

    That said, I've yet to find a NACA approved realtor in my area NYC/Lower Westchester.

    Do you have any suggestions for finding a realtor in my area that wouldn't mind dealing with the extra nuances of buying with a NACA loan?

    And is the process complex if you find a home that needs renovation? How did you find your NACA approved contractor?

    Thank you!

    0Reply
  • Carley M.
    Investor · Buffalo, NY · Member since 2016 · 100 posts · 71 votes
    9y
    Alan Dominijanni - NACA can assign you an already approved realtor, or you can find a realtor you like and ask them to sit through the webinar to learn about the program. There really ISN'T that much additional stuff for a realtor to do - i did my purchase without a realtor and had the NACA attorney draw up the sales contract. If your property needs rehab, you need to request a second appraisal (subject to repairs/improvements) and you're allowed to borrow up to 110% of the SUBJECT TO appraisal value. While you can use a non-NACA contractor, I don't recommend it. My contractor does a lot of work for NACA so their office took care of all the paperwork and they used their own money to pay for the repairs - NACA doesn't pay until everything is done. The downside is that they were pricier than I could have gotten, but it wouldn't have been worth the headache to ME to act as the GC for my job. My contractor assigned a project manager and everything went smoothly. I had a hard time finding someone in my area to do the work because of the City's licensing requirements. I spoke with my HAND coordinator and he helped me get the contractor to come give me a bid. I had unsuccessfully scheduled 7 (!!!) contractors to bid (on 3 separate attempts) and my sellers were antsy and unwilling to keep making the property available for estimates. Any additional contractor cost was more than offset by my closing cost savings and not being aggravated by ONE MORE thing. Just a word of caution: your mortgage consultant at NACA is probably about ready to check out (mentally) on your file. His/her part is pretty much done even though you're still a ways from closing. Now is the time to start paying more attention to those Lender Conditions on your NACA web access so that you know what is holding up your loan and who is responsible for providing what information. Good luck to you! It's worth the struggle. I promise.
    1Reply
  • Phil G.
    Real Estate Broker · MA · Member since 2013 · 361 posts · 297 votes
    9y

    NACA can be a great program for a buyer, but the stars all have to align for it to work. I introduced a friend of mine, who I was helping buy a condo, to the program. He was well-qualified for conventional financing, but the buy-down, no PMI and no closing costs were certainly tempting. In the end, we went with a conventional loan. In a competitive market, NACA can be a serious disadvantage. The NACA certification letter, which serves as a preapproval letter, raises just enough questions for sellers/listing agents to google NACA -- where they find a bunch of bad reviews and NACA's website complete with photos of picketers and stories which regale the reader with the retelling of their glorious fights against predatory lending from the housing meltdown.

    It lost us one unit, in a multi-offer situation, in a market where prime units come up very infrequently. When another desirable unit opened up, I started working the NACA process and the first NACA-approved home inspector I called, asked "Have you ever dealt with these people (NACA) before?" I took that conversation to heart, spoke with my friend and asked him if he wanted to stay the course with NACA and possible lose another apartment or if he wanted me to get this place for him. He said he really wanted the place, so I went to work with my regular mortgage guy and got the deal done.

    The folks at NACA are well meaning, but many of their offices are understaffed and overworked, lots of turnover, bad communication, confusing systems and management that doesn't know how to fix the problems that exist. If they were a regular lender or mortgage broker they'd be out of business. Ending on sort of a positive note, once a buyer has gone through the NACA paper-chase, applying for a regular mortgage seems like child's play to them.

    0Reply
  • Carley M.
    Investor · Buffalo, NY · Member since 2016 · 100 posts · 71 votes
    9y
    Phil G. - I have also seen seller hesitancy toward accepting a bid from a NACA buyer. There definitely needs to be some education among the realtors. Discriminating based on source of funds (NACA vs traditional lending) is a felony.
    0Reply
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