Zero-down loan program aims to expand mortgage access

MIAMI – Oct. 16, 2018 – A new effort is underway to raise the low homeownership rate among underserved groups of homebuyers.

The Neighborhood Assistance Corp. of America (NACA) is hosting several events across the country to help borrowers with low credit scores apply for 15- or 30-year mortgages with cheaper interest rates. One recent event in Miami drew thousands looking for a chance to get a no-downpayment, low-interest-rate mortgage. NACA officials say more than 10,000 potential borrowers have attended various NACA events in cities such as Charlotte, N.C., and Atlanta.

“The low rate of homeownership and number of mortgages for low- and moderate-income people, and for minority home buyers, is a national disgrace,” NACA CEO Bruce Marks told CNBC. “There have been zero foreclosures among the loans that we’ve originated in the past six years.” Bank of America is backing the NACA program with $10 billion in mortgage commitments.

To qualify, borrowers must go through an education session about the program, as well as counseling for budget planning, to make sure they can afford a mortgage payment. They also must submit all necessary documents, including income statements and phone bills.

The program serves only those who are buying a primary residence, not an investment property. The loans for 15- or 30-year fixed-rate mortgages are below market, at around 4.5 percent.

“That’s what’s going to help people who’ve been locked out of homeownership really become homeowners and build wealth,” Marks told CNBC.

However, critics of the program worry that loans with a no-downpayment requirement could carry too much risk.But program officials say buyers have “skin in the game in a real way,” meaning it’s their home and an investment for their family.

“We have seen significant wins in this partnership,” A.J. Barkley, senior vice president of consumer lending at Bank of America, said. “Just to be clear, when we get those loans with all the heavy lifting here, we’re over a 90 percent approval, meaning we actually underwrite the loans for 90 percent of the people who go through this program.”

Source: “Thousands Line Up for Zero-Down Payment, Subprime Mortgages,” CNBC (Oct. 12, 2018)


                                  INFORMATION FOR VETERAN BORROWERS
If you have a VA loan and your home was affected by a natural disaster, we encourage you to take the steps listed below to ensure you receive the assistance you need.

(1) Contact FEMA (Federal Emergency Management Agency)
Begin the disaster application process online at or by calling 800‐621‐3362. In order to receive the maximum assistance, you must register with FEMA before their deadline expires. Do not pay your loan in full before checking with the Small Business Administration (SBA) regarding a loan for the uninsured portion of your loss. Additional support, including low‐interest loans, cash grants, and housing assistance may be available from agencies associated with the disaster recovery effort. For more information, go to

(2) Contact Your Mortgage Company
You are responsible for making regular monthly loan payments, even if your home is
not habitable, so contact your lender as soon as possible regarding your loss. If you are unable to make payments on time, we encourage you to discuss forbearance or a loan modification. Also have your lender explain procedures for insurance loss checks, repairs to your property, payments to contractors,etc.

(3) Contact Your Insurance Company
File an insurance claim as soon as possible; however, do not make a hasty settlement on insurance. When the property is damaged but repairable, attempt to get your local engineer’s office to inspect your home for structural damage. If possible, get at least two estimates from licensed contractors for cost of repairs or rebuilding. ‐‐ Insurance checks for personal property and living expenses should be payable to you only. Checks for damage to your home should be payable to both you and your mortgage company.

(4) Change your Address
If you are receiving a monthly benefit check from VA or another source and you will not be able to receive mail at your regular address, notify your local post office and VA Regional Office ( your change of address. For information on other VA benefits, call 800‐827‐1000.

(5) Check Other Sources for Assistance
Contact local offices of the American Legion, Veterans of Foreign Wars, Disabled American Veterans (DAV) or other veterans’ organizations to see if special assistance may be available, even to non‐members of the organization.


Lenders must check with FEMA to obtain the specific counties and corresponding declaration dates ( along with any amendments to the declaration.

Loan Closed Prior to Disaster. Any loan closed prior to the date of the declared disaster is eligible for VA Guaranty without regard to the disaster. The “Information for Mortgage Servicers” section below applies to these cases.
Properties Appraised Prior to Disaster. If the property was appraised on or before the date of the declared disaster and not closed prior to that date, the following items must be submitted with the VA guaranty request:

(1) Lender Certification

This is to affirm that the property which is security for VA loan_______________ number has been inspected to ensure that it was either not damaged in the recently declared disaster or has been restored to its pre‐disaster condition or better.

_______________________   ________________     _______
(Lender Signature)        (Lender Title)         (Date)

(2) Veteran Certification

I have inspected the property located at __________________________ and find its condition now to be acceptable to me. I understand that I will not be charged for any disaster‐related expenses and now wish to close the loan.

___________________________    _____________
(Veteran Signature)               (Date)
(3) VA Loan Summary Sheet (VA Form 26‐0286).

The Remarks section of this form must be annotated “Lender and Veteran Disaster Certifications Enclosed.” Additionally, if local law requires the property to be inspected and approved by the local building inspection authority, a copy of the appropriate local report(s) must be provided. Neither VA nor the veteran purchaser shall bear the expense of any disaster‐related inspection or repairs.
(4) Decline in Value.

If there is an indication that the property, despite repairs, will be worth less at the time of loan closing than it was at the time of appraisal, the lender must have the VA appraiser update the original value estimate. The payment of the appraiser’s fee for that service will be a contractual matter between the buyer and seller. If the property value has decreased, the loan amount must be reduced accordingly.
(5) Employment/Income Certification.

Lenders must confirm prior to closing that the veteran’s employment and income have not changed since the loan application. If at time of closing the veteran or co‐borrower is no longer employed or income has been reduced, this information should be reported to VA or the automatic underwriter, as appropriate, for evaluation prior to closing.


Mortgage servicers must check with FEMA to obtain the specific counties and corresponding declaration dates ( along with any amendments to the declaration

Assistance to Homeowners. VA encourages servicers of guaranteed loans in disaster areas to extend all possible forbearance to borrowers in distress. VA regulations on Prepayments (38 CFR 36.4311), Advances (38 CFR36.4314), Loan Modifications (38 CFR 36.4315) and Supplemental Loans (38 CFR 36.4359) may be of assistance in appropriate cases. It is the loan holder’s responsibility to counsel borrowers concerning assistance that may be available.
Moratorium on Foreclosures. Although the loan holder is ultimately responsible for determining when to initiate foreclosure and complete termination action, VA encourages holders to establish a 90‐day moratorium on initiating new foreclosures in the disaster area.
Insurance Requirements. VA regulations (38 CFR 36.4329) require that lenders and holders ensure that homes financed with VA‐guaranteed loans be sufficiently insured against hazards. Insurance proceeds are to be applied to the restoration of the security or the loan balance. The burden of proof is upon the holder to establish that no increase in VA’s ultimate liability is attributable to failure of the holder to have the property properly insured or properly apply an insurance loss settlement.

Case‐specific appraisal, origination and servicing issues may be directed to the appropriate VA Regional Loan Center (

Things to know to build a home using a VA construction loan

In a previous VAntage Point post, The Plan Collector blogged about how a Veteran could build a new home. They mention that construction to permanent loans can be “difficult to find.” Two years later, more and more lenders are now offering this one-time close product.
However, before you run out to build your dream home with no money down, take a few minutes to read and understand some the guidelines and requirements with this program.
First, you will need a licensed, insured builder that is willing to submit documentation to become an approved builder. The VA program does not allow for owner/builders. While the VA only requires that the builder be registered to participate in the program, each lender can require the builder to go through an approval process.
The borrower and the builder must submit a complete set of plans and specs for the home when applying. Additional forms will be sent to the builder to describe the specific materials to be used and the lot and surrounding area of the future home site.
The builder takes on more responsibility with this loan than with a 20 percent down conventional loan. It’s best to have your builder and lender speak and discuss this early in the process.
Closing costs are a part of the builder’s responsibility. The borrower can pay the closing costs normally associated with a purchase loan, but the builder must pay for all the construction loan closing costs and interest during closing. The VA will allow the builder to incorporate these costs into the agreement to build with the borrower.
Make sure you are building a home that is common in size and design for the area. The home must be appraised per the plans and specs given to the appraiser. If a borrower over builds for the area, or builds an uncommon home, the appraisal may come in lower than needed for a zero down payment.
Don’t build on land that is larger than what would be considered “standard and customary” for the area. The appraiser may feel that some of the land is excessive and again, you may find that the appraisal falls short of what is needed.
Finally, keep in mind that this process takes 45-60 days to process, with an experienced loan officer. If you are purchasing the land as part of this loan you will want to set the proper expectations with the land seller.
FHA and VA construction loans are in the deep end of the mortgage pool. Make sure you are working with a loan officer that understands the program.

About the author: Jerry Thomas is a construction loan officer with 23 years of experience and specializes in VA construction loans.


Millennials, put down the avocado toast.
Ever dream of owning a home in sunny California or picturesque Colorado? This map will let you know if you can actually live that dream someday.
*** determined the cost of an average home in each state by pulling the medium home prices from Zillow, calculating monthly payments with a 4-5% market interest and a 10% down payment. Given that many financial advisors say you should invest a maximum of 30% of your gross income into a home, the website used this benchmark to calculate the minimum salary needed to afford a state’s average home.
It’s not a perfect science/calculation, particularly when you consider how medium price of homes fluctuate greatly from cities to rural areas. But the rankings do offer a bit of context.
West Virginia requires the lowest salary needed to afford its average home — $38,320 for a house worth $149,500 — followed closely by Ohio where you’d need to make $38,400 for a house worth $149,900.
There are the five most expensive states to buy homes.
Looks like that dream beach house is a going to stay a dream for most of us. You need to make $153,520 for a house worth $610,000 in Hawaii.
If you want to live near the White House, you need to make $138,440 for a home worth $549,000.
Everyone wants to live in California, and the demand keeps driving up the rising prices. The state is dotted with cities more expensive than the next, and you need to make $120,120 for a house worth $499,900.
You need to make $101,320 for a house worth $419,900 in Massachusetts, and you need to make even more if you want to send your kid to Harvard.
The housing market around Denver drives up Colorado’s costs, where you need to make $100,200 for a home worth $415,000.

Homebuyers now have something else to be worried about besides the housing shortage

Mark Blinch/Reuters

The recently passed Tax Cuts and Jobs Act created anxiety about housing, since it reduced some of the benefits that homeowners enjoyed.
However, the impact from the new tax law is most severe for high-priced homes, which make up just a minority of the market.
A bigger issue for most homebuyers is that interest rates are on the rise. Or, at least, there’s a growing consensus the era of being able to count on interest rates to stay low is nearing its end. For prospective homeowners, that means financing a mortgage could become more expensive over time.
“A lot more people are cognizant of interest rates than in the last 12-24 months,” Noah Goldberg, a real estate agent in Hoboken, New Jersey, told Business Insider.
The good news, according to Goldberg, is interest rates alone don’t determine the decision to purchase. People still want houses they hope would appreciate with time, and that they can take pride in. But he anticipates some shoppers would need to settle for properties in the lower end of their budgets.
“More than anything, people are going to jump off the fence because of interest rates picking up,” said Jason Cassity, a real estate agent in San Diego.
“Interest rates and home-equity growth are going to move them more than this tax plan will.”
On Wall Street, investors are bracing for higher inflation, as the federal government stimulates the economy by cutting taxes and raising spending. That means the Federal Reserve may have to raise borrowing costs to reduce the risk of consumer demand running too far ahead of what the economy can produce.
And that would mean higher mortgage rates.
These expectations have already bumped up mortgage rates in 2018. According to, the average US 30-year fixed rate rate was 4.33% on Friday, up from 3.85% on New Year’s Day.
That’s a two-year high, but still well below the 6%+ rates that were charged before the housing crisis. And zooming out even further, rates remain historically low.
Business Insider/Andy Kiersz, data from FRED

It’s one reason why demand is still strong. Kalena Masching, a Redfin agent in Palo Alto, California, saw 44 offers on one house last week, for example.
That doesn’t negate the fact that a rising-rate environment makes waiting out on homebuying more expensive.
“The people not paying attention are those who bought in the 1980s and 90s when interest rates went over 20% and spent most time in the double-digits,” Masching said.
“For first-time buyers who haven’t seen an interest rate over four or 5%, it maybe makes them think, but it’s not affecting whether or not they’re buying right now.”
But even with a favorable rate, the biggest challenge for a lot of buyers remains finding a house within their budget. The most affordable starter homes are rising in value faster than luxury properties, and have been for at least five years, according to a Zillow report released on Friday.
That’s in large part because affordable houses are in short supply.
Oyedele, Akin (Feb. 18, 2018) Homebuyers now have something else to be worried about besides the housing shortage. Business Insider. Retrieved from