Investor's Loan Guide by Graham W. Parham

Real estate investors who are buying distressed properties are constantly
running into structural issues that the seller will not correct for prospective
buyers. Most of the structural issues of distressed properties are roofs and
foundations. The majority of lenders today will not lend on any property that
has structural problems. This creates a “Catch 22” for both buyers and sellers.
The majority of your distressed properties are bank-owned REO’s or FHA
foreclosures. Sometimes HUD will cure these issues prior to putting the property
on the market and sometimes they will not. The same is true for bank owned
properties.
For years investors have had to pay cash for these properties because no
lender would fund the loan on a “Non-Habitable” property.
Now with a Short Term Escrow Holdback Program, we can lend on these
properties and correct any issues after closing. This is not a rehab program.
Either the buyer or the seller will have to bring the additional funds to the table
for these repairs to be held back in escrow. In the past, most Fannie Mae and
Freddie Mac lenders would not allow for escrow holdbacks on non-habitable
properties. Now we can.
Program Highlights:
• All holdbacks will require a mechanics lien
• All repairs have to be completed within 30 days
• All the funds will be held by WJ Bradley and released upon
completion
• A certificate of completion will be required from an appraiser
• We will hold back 150% of the bid amount for repairs
• No more than $15,000 of repairs will be allowed
• All repair bids will have to be approved by the lender
Items that can be included in the escrow holdback:
• Foundations
• Roofs
• Electrical
• Plumbing
• HVAC
This program is designed to allow short-term repairs done to the property
to make sure that there are no problems for a habitable property for renters. If
you need more than $15,000 for your repairs, ask about the Fannie Mae
Homestyle Rehabilitation Program.
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