Neighborhood Stabilization Program

MFA NSP funding for acquisition/rehabilitation has been awarded to the following subgrantees.  Please contact them directly for more information about homes.

  

What is Neighborhood Stabilization? $19.6 million in federal money has come to New Mexico to fund the Neighborhood Stabilization Program, or NSP1, which is part of the Housing and Economic Recovery Act of 2008. The money MFA administers, $8.7 million, is used to buy and rehabilitate foreclosed properties. Those homes will then be sold to families whose incomes are below 120 percent of median throughout the state.   The cities of Albuquerque, Santa Fe and Las Cruces received their own NSP funding.

 

 

Do the properties have to be purchased at a discount? Properties must be purchased for at least 1 percent (1%) below appraised value.  

 

Are these cash offers? MFA will fund the purchase directly to the title company for closing, and will provide a Note, Mortgage and LURA to be executed and recorded.

 

Who is the “subgrantee”? The subgrantee is who will be buying the foreclosed home. MFA has a contract with the subgrantee to perform the NSP work.

 

Why are there contingencies on the offers? This program must comply with federal regulations and the contingencies reflect some of those regulations. The purchase agreement should have an addendum that states that the purchase will be funded by MFA at closing using Neighborhood Stabilization Program funds and that the offer is contingent upon receipt of a HERS report, an appraisal and the environmental review report. The subgrantee will order and pay for these reports. The subgrantee must ensure that the owner is informed in writing of what the grantee believes to be the market value of the property and that they will not acquire the property if negotiations fail to result in a an amicable agreement. 

 

What are the income limits for NSP? All activities funded by NSP must benefit low and moderate and mid-low income persons whose income does not exceed 120% of the area median income (AMI).   For this program, low income means at or below 50% AMI. The income listing for the targeted counties can be found in the NSP section of MFA’s web page.

 

·      First Mortgage: Permanent, 30-year fixed-rate mortgage loan at 3%, or a market rate first mortgage loan for a residential property that was purchased by an subgrantee and repaired to meet market and Energy Standards of the NSP program. This mortgage will be for the amount the subgrantee purchased the foreclosed home from the lender. 

·      Soft Second mortgage: for cost of rehabilitating the property to NSP guidelines, up to $50,000. Zero percent (0%), non-amortizing, “soft second” mortgage, due within the prescribed affordability period if the borrower sells, refinances, or transfers the property to an ineligible household. After the affordability period, principal balance reduces annually based on amount of loan.

·      Eligible Purchasers: No first-time homebuyer restrictions, but must occupy as a principal residence and not own a second home.

·      Housing Counseling: All purchaser(s) must complete at least 8 hours of pre-purchase counseling with a HUD-approved, MFA-certified agency.

·      Eligible Property Types: Properties financed with the “Financing” activity must have been foreclosed and must meet all applicable NSP guidelines. Properties must be owner-occupied single family residences (including manufactured homes built after 1976) which meet all secondary market guidelines for insurability. Properties located on Native American Trust Land that are in targeted counties may also be eligible for funding.

·      Maximum Loan Amount and LTV: The Mortgage Rehab Program loan has a maximum loan-to-value (LTV) and combined loan-to-value (CLTV) of 100%.

·      “Soft costs” and fees will be paid by MFA in addition to the maximum loan amount.

·      Loan Underwriting: Financing activity loans must be underwritten to FHA Mortgage Loan Credit standards, with the following exceptions:

 

1.       A maximum single, qualifying debt-to-income (DTI) ratio of 41%

2.      No mortgage insurance premium required

3.      A minimum $500 out of pocket borrower expense (Earnest Money)

 For more information contact MFA’s Debbie Davis at ddavis@housingnm.org