Through the Neighborhood Stabilization Program, the City of Phoenix is implementing a program that will provide some home buyers with a $15,000 interest free loan to purchase a foreclosed property...
Yesterday I attended an information session held by the City of Phoenix regarding the Neighborhood Stabilization Program (NSP). I’ll attempt to summarize, and opine. Links for further information are at the bottom of this article.
What is the NSP Homeownership Assistance Program?
The NSP Homeownership Assistance Program provides a $15,000 loan for down payment and closing cost assistance for buyers of foreclosed homes anywhere in the city of Phoenix. The full amount of the loan is paid back to the city when the homebuyer sells the home or refinances. The program targets foreclosed single family homes, townhouses and condominiums (condo conversions are not eligible) that meet HUD Housing Quality Standards (HSQ). The Homeownership Assistance program is for down payment and closing cost assistance only and cannot be used to fund rehabilitation activities.The $15,000 is a loan, and a lien will be placed on the home. It has to be repaid if the home is ever sold or the loan is refinanced. (Program officials noted that if you live in the home for 45 years, the loan payment becomes due, but a request for an “extension” will be available at that time.) Repayment is also due if the home is no longer used as a principal residence – in other words, you can not convert it to a rental property.
Eligible Homebuyers
- Can earn up to, but not more than 120 percent of Area Median Income (AMI) based on family size. All sources of income are considered. These limits are:
Family Size/Earn Less Than
1 /53,950
2 /61,650
3 /69,350
4 /77,050
5 /83,200
6 /89,400
7 /95,550
8 /101,700
- Must be creditworthy (as deemed by FHA).
- Must qualify for a 30 year, fixed rate loan (not subprime).
- Must invest $1,000 of your own funds.
- Must obtain a three-year home warranty, not to exceed $1500.
- Must complete a required eight hour Homeownership Education and Credit Assessment counseling course at least 6 months prior to closing.
- Can not own ANY other real estate.
- Must maintain the home as your principal residence.
Eligible Property
- Home must be located inside the Phoenix city limits.
- Must be a foreclosed, lender owned property.
- Must be appraised within 60 days of the purchase contract.
- Sales price must be at least 15 percent below appraised value.
- Must be clear of Phoenix’s top eight neighborhood code violations:
- Trash disposed of properly
- Cars parked in designated areas
- No visible outdoor storage
- No graffiti
- Fences maintained
- No inoperable vehicles
- No unsecured vacant buildings
- Maintained vegetation
- Must pass HUD Housing Quality Standards (HQS) inspection prior to close of escrow (this is a “safety and health” inspection, not a full-blown home inspection).
Other Details
Phoenix has been allotted $38,478,000 in NSP funds, but only $2.82 million has been allocated for this particular program. I’ll do the math for you, that amounts to 188 homes that can be purchased through this program. Other programs using these funds will be announced later.
Funds are anticipated to be released later this month.
No specific areas or income levels are being targeted.
There is a $50 fee to take the required education class, but that is refunded at close of escrow.
There are not any “preferred lenders” – you can use any lender of your choice.
Read more of this article at: Phoenix to Offer $15,000 Loans to Purchase Foreclosed Homes.
Links to further information:- Neighborhood Stabilization Program (NSP) Homeownership Assistance Fact Sheet (contains contact info for required home ownership education classes)
- Phoenix Neighborhood Stabilization Program (NSP) web site
- Phoenix’s top eight neighborhood code violations
- Information on HUD’s Housing Quality Standards (HQS) requirements
- Phoenix City Council draft report on Neighborhood Stabilization Program
- City of Phoenix application for NSP program (contains info on other parts of NSP plan)
- HUD web page on NSP (more for municipalities that want to participate)
- Excel spreadsheet from HUS showing Arizona cities fund allotment
