Effective immediately, Wisconsin Neighborhood Advantage funding is available in select Wisconsin counties for the purchase of foreclosed (REO) homes. The loan can be used to purchase a vacant single-family or duplex home and grants are available for limited home repairs. This loan is available only for properties in Brown, Dane, Kenosha, Milwaukee, Racine, Rock and Waukesha counties. The funding for this program comes from the Department of Housing and Urban Development’s Neighborhood Stabilization Program (NSP). The program is being administered by the Wisconsin Housing and Economic Development Authority.

Features and benefits 

• Low-cost, 30-year fixed interest rate.
• $1,000 minimum borrower down payment.
• Job Loss Protection pays the mortgage payment for up to six months in the event of involuntary unemployment.
• Purchaser does not have to be a first-time homebuyer.
• Down payment assistance is available.
• Grants are available for home repairs but the property needs to be in relatively good shape.
• Buyer may use the federal $8,000 First-Time Homebuyers Tax Credit provided they qualify. 

General eligibility guidelines 

• Purchase price cannot exceed 90 percent of the appraised value.
• Borrower must attend eight hours of face-to-face homebuyer education through an approved HUD counseling agency. 
• Property must be owner-occupied.
• Purchase price and income limits apply based upon the income of all prospective property occupants who are 18 years or older.  

It is anticipated that the NSP funding will generate 350 closings from June 2009 through July 2010.

WHEDA's real estate purchase addendum

For buyers taking advantage of this program, WHEDA will require that WHEDA’s Real Estate Purchase Addendum be used with the offer to purchase. A copy of WHEDA’s Real Estate Purchase Addendum for the Wisconsin Neighborhood Advantage Program is available at www.wra.org/WHEDA_NAP.

This addendum indicates that NSP funding may be used to purchase a vacant REO property or a property that was acquired and rehabbed by a municipality, non-profit agency or other entity using federal NSP funds and is now for sale. For REO properties, the purchase price cannot exceed 90 percent of the appraised value, so it is important that buyers apply for financing and that lenders have the property appraised as soon as possible.

The addendum provides that the Inspection Contingency will have a 15-day deadline. However, the inspection should be done as soon as possible because the lender will not order the appraisal until the inspection has been completed. The seller will not have the right to cure and the seller must turn on all utilities for the inspection. If the buyer does not terminate the offer based upon the inspection, then the buyer’s lender can order the appraisal. If there are property defects, the buyer may be able to borrow funds to make certain repairs before moving in.

The deadline for the Financing Contingency is 45 days.

If the purchase price plus 10 percent is more than the appraised value, the parties agree to amend the offer to provide for a purchase price equal to 90 percent of the appraised value within five days of receipt of the appraisal. The amendment acceptance date shall thereafter be deemed to be the acceptance date for the offer, thus resetting the contingency deadlines measured from the offer acceptance date.

WHEDA strongly urges that a buyer not proceed in these transactions without written seller acceptance of the offer.

Debbi Conrad is Director of Legal Affairs for the WRA.