I was curious to see what I could get with a 480 credit score. I saw in Lennar’s ad that they were requiring a 600 score on a new home. More interesting, the ad said you can put “0” down but it requires the buyer to qualify to obtain down payment from a "non-profit down payment assistance program." I decided that was worth a call to Lennar, to get the skinny on the program. It is called the "Nehemiah Assistance Program" You can read about it on GetDownpayment.com. They also have a Christian Ministry component. Boy, the website was pretty odd. You had to take an online course to qualify for no down payment. Nehemiah tells developers on their website:
“As a builder, your success depends on getting more qualified people to visit your homes. Putting together the most attractive home package available will drive more people to your communities. The Nehemiah Program® understands this. When you partner with Nehemiah, you can advertise your homes as having downpayment assistance available. Nehemiah will partner with you to create just the right marketing campaign for your homes.”
That is a non profit? This Nehemiah Program is a story in itself, however, I am writing about credit scores.
I decided to call around to see what was up. I claimed my credit score was pretty bad: 480. I called "------" (btw, beware of phone shopping, this guy had some kind of ID reader on his phone...the guy read me back my name and address). They said their minimum score was 580. When I said mine was 480, they weren’t that disappointed. (I have since heard from this guy so I am leaving out the name of his company -- remember to watch out for that ID reader).
I then called "Chase" which also required 580. When I said my score was 480 the guy said “We have programs that don’t require credit scores, assets or salary disclosure.” They are called Hard Money or Hard Equity loans. They lend money based on equity: you need 35 to 40 percent down for these loans. They can only lend you up to 65% of the value of the property. "Choice One Mortgage" had the same story — 580 required -- for my 480 credit score, 35% down and they would give me an 11 or 12 percent adjustable mortgage.
Still seems risky for the lenders/banks. With value still dropping in South Florida, they still could still lose. Apparently a credit score of 480 doesn’t scare mortgage lenders.
P.S. The Nehemiah Mission:
"Nehemiah transforms lives by increasing homeownership and asset development opportunities for diverse populations, while maintaining our commitment to successful, responsible homeownership.
Nehemiah transforms communities by expanding our faith-based, charitable and community development initiatives into underserved neighborhoods across America."
Also see today’s post: Bank Failures
15 comments:
Another phony charity
This is by far the dumbest excuse for a charity I have even seen. Maybe the developers give money to it and that pool of money is used to give downpayments as it is probably illegal for them to hand the people the downpayment.
If I were a lender, I would have hung up on someone with a score of 480. What are they thinking? No income check, this is another bad situation. All you need is a crooked appraiser and you have a bad deal for the bank.
fishy smelling ---
That is exactly what the Columbus Dispatch said:
"Typically, a charity gives the customer a down payment, and the builder reimburses the charity plus a processing fee."
What I am curious about. the Dispatch Story came out in May 06 yet this is still going on as part of Lennar's financing package. The article said the IRS called them scams....hmm. Why haven't they been stopped?
The IRS is busy. They are looking at our tax returns for errors.
Hard money loans are not made by banks, they are made by private individuals on a case by case basis. That is why they are called hard money. Brokers often have a list of investors who will fund loans based upon equity in the property if you have 35-45% equity it really doesn't matter what your credit score is. The lender will just foreclose and hopefully not loose too much if any $$ at all.
last Anon:
I called Chase? The ad said www.chase.com. It was not a private individual, it was a bank representative.
charitable and community development initiatives into underserved neighborhoods across America."
Is that "under served" or "un-deserved"?
At any rate the mortgage gets sold to Fannie and then guaranteed by us taxpayers. By then all the fees will have been paid and we are all left with an empty bag.
Chase does not originate, underwrite or guarntee hard money loans or any first mortgages at 11%to 12% interest rate. The person you called was acting as a mortgage broker, altough he may of been employed by Chase. He would of then added origination points to your closing statement to get paid.
Hard Money Lender
I think Chase should have their policies pushed when their name is used. How does this reflect on their bank? It didn't make me feel like they were protecting the consumer or those that invests in their bank.
If you inflate the cost of home slightly, allow a charity to give you the down payment, and then allow builder's to donate to those charities (taking a tax deduction) that is a scam. Prices of houses are dropping, but no one can predict where the bottom is, and therefore that makes the market soft and prices somewhat confusing. This whole thing with Nehemiah Mission really smells of a scandal.
This program has been around for a great deal of time. It's essentially the developer "granting" the "charity" funds which are then turned over to the buyer to make a down payment. It's legal, but grey in it's ethics. Do a Google search and see that HUD is trying to kill this program but housing activists are fighting just as hard to keep it. Why get rid of this program? Nehemiah programs (yes, there are others) have a significantly higher foreclosure rate.
A Loan Guy.
They better hit bottom soon, I really truly dont want to be upside down on a mortgage that I got snookered on... which I did.
Scam companies are all over south florida.. try...http://www.outreachhousing.com
Another..scam of "we will take your money and save your house from foreclosure."...
Thanks, Loan Guy. Stick around and blog often. We need your input
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