This program was just released for you. We understand that there are
certain situations that require you to hold the property for a few days versus
being able to conduct a back -to-back closing. For example, there are times when
your end buyer’s lender has no seasoning issues but they do not want to and loan
docs or wire money into escrow until they have a copy of the recorded deed from
the first transaction.
We have created an extended transactional funding product to cater to these
scenarios to enable you to continue to capitalize on these types of
transactions. Our extended transactional funding product will enable you to hold
the property for up to 10 days. This product is undergoing BETA testing via
existing customers until December 1st, 2010 and all Guidelines and Pricing are
subject to change.
Here is the list of our requirements in order for us to underwrite your
transaction for potential funding.
1. 2-10 day holding period
2. Entities Only – We will
only fund deals to entities, not to individuals. There are no exceptions.
3. Disclosure – You’re A to
B contract must have disclosure that you intend to immediately resell the
property to a 3rd party for a profit. Your B to C contract must disclose that
the end buyer’s purchase is contingent upon your purchase of the home, first.
4. $250,000 Loan Limit –
your loan request must be under $250,000
5. Secured End Buyer – You
must have your end buyer under contract for the resale within 10 days of your
purchase
6. Hard Earnest Money – Your
end buyer must put up at least 3.5% of their contract price or a $3000 minimum
earnest money deposit and contractually agree that once you purchase the home
their money goes “hard” or non-refundable.
7. Approved End Buyer – Your
end buyer must be approved for their loan and all conditions must be satisfied
other than the requirement that the lender receive a copy of the recorded deed
from the first transaction before sending loan docs and a wire.
8. Required Homeowner’s Insurance
– you will be required to get a homeowner’s insurance policy good for 6 months
at time of closing and pay for this out of your own pocket.
9. Closing Agent Requirements
– Short sales are required to utilize the same closing agents for each
transaction while REOs may have separate agents for each closing.
10. Profit Minimums – Your
transaction must have the minimum total profit based upon the schedule below.
Minimum total profit should be determined by subtracting the gross purchase
price from the A to B closing from the net proceeds from the B to C transaction.
We will default to whichever is the greater of the total profit percentage or
the minimum profit dollars.
| Holding
Period(Days) |
Total Profit Percentage |
Min. Profit Dollars |
|
0-1 |
NA |
NA |
|
2-4 |
12% |
$12,000 |
|
5-10 |
15% |
$15,000 |
11. Maintenance – you will be
required to maintain the property and cover any and all expenses associated with
doing so out of your own pocket during the holding period.
12. Credit Report – may choose to
or not to pull your credit. This is not necessarily because we are checking your
score, but more so for any liens that may automatically transfer on to the
property once you buy it and are holding it for a few days.
13. Criminal Background Check –
This speaks for itself.
14. Pricing – Our pricing is based
upon the holding periods established below.
| Days |
Points |
|
0 to 1 |
2% +$495 |
|
2 to 4 |
3% +$495 |
|
5 to 10 |
3.75%+$495 |
DOCS REQUIRED FOR UNDERWRITING SUBMISSION
1. A to B Contract – Please
circle disclosure of immediate resell
2. B to C Contract – Please
circle disclosure the resale is contingent upon your purchase and the agreement
that the C buyer’s deposit goes 100% non refundable once the A to B transaction
closes.
3. Loan Approval – Please
send a copy of your end buyer’s loan approval stating all conditions are clear
with the exception of recorded deed being given their lender. IF the end buyer
(C buyer) is using a mortgage broker, versus a direct lender, the mortgage
broker must provide an actual copy of the underwriting approval from the direct
lender with the above conditions. All personal information for the end buyer/C
buyer can be removed or “whited out”. Phone number for lender/underwriter must
be on the loan approval.
4. Earnest Money – Please
provide a copy of the earnest money check as well as a letter from the escrow
agent stating they have deposited it. This letter must come from the escrow
company that is doing the actual closing. The escrow must be held in the actual
closing agent’s escrow, versus a real estate broker’s escrow account.
5. Profit Breakdown – Please
submit preliminary HUDs for each transaction or a detailed breakdown of your
profit
6. Assets Proof For Insurance
– Please send in an asset statement of some sort verifying you have at least
$1000 to cover the homeowner’s insurance policy required during the 2-10 day
holding period
7. Social Security Number –
for background and Lien check
