Posted on: 23rd Oct, 2007 11:07 pm
I'm wondering if anyone out there has some information on CHAPA and FHA. CHAPA is the program that I'm using for my down payment and closing cost assistance. I went with them over CHFA because I was told they also offer the assistance with the closing, while CHFA only helps with the down payment. I found out only two weeks ago that the program was being discontinued at the end of October (this came from my lender and realtor). However, on the CHAPA web page, it states the discontinue date as September. The October date now seems fishy to me, given the recent problems I'm having with my lender. For one, I never got any Good Faith Estimate paperwork from her. I pretty much got nothing from her other than verbal info. In addition, I was told that CHAPA helps with both down payment and closing costs, and was told that they pay 97% and I would have to pay 3%.
I assumed this was for both the down payment and the closing from what I heard. The seller agreed to pay 6%, 3% for down and 3% for closing, and so I assumed that that was taking care of what I would have had to pay, and I would only need to pay for taxes, earnest money, and inspection fees. My lender was in the hospital and had no one else handling my loan, so I was not kept up to date on anything. Now, when I first applied, I was told that my closing costs would be $2500, not that it was required to be cash out of my pocket, so given that I was going through CHAPA and the seller was contributing, I was a little confused (more like a lot), when my lender asked me if I had my closing cost money today, 7 days before closing. I told her I thought it was taken care of by CHAPA and seller. She says, "No, seller is paying 3%, but you have to pay rest. Remember, I told you that when you applied." So here is my question. If seller is paying 3%, and I'm expected to pay the rest, what in the heck is CHAPA paying for...and if they are in fact, as I suspect, not paying for a darned thing (it is the seller, which could be negotiated in any darn loan program), why was I rushed into a sale so that I could get the CHAPA assistance when CHFA would have essentially been the same thing? I mean, on a $92,500 home, how much closing costs should there be?
Also, going back to the cash out of pocket thing, I'm doing an FHA loan, and my information on FHA states that I can 1. finance closing costs into my mortgage or 2. finance my closing costs another way. Now, seeing how I was approved for a $95,000 dollar loan, and with the closing and down payment costs bringing my actual finance cost to $86,000, I have plenty of room to work with...so why is my lender telling me I can't 1. roll it into my loan, or 2. finance it another way? She says it has to be out of my own pocket (can't be a small loan from my bank) or a gift. As if I know someone who can just hand over $2500 bucks. Can anyone out there help me?
I assumed this was for both the down payment and the closing from what I heard. The seller agreed to pay 6%, 3% for down and 3% for closing, and so I assumed that that was taking care of what I would have had to pay, and I would only need to pay for taxes, earnest money, and inspection fees. My lender was in the hospital and had no one else handling my loan, so I was not kept up to date on anything. Now, when I first applied, I was told that my closing costs would be $2500, not that it was required to be cash out of my pocket, so given that I was going through CHAPA and the seller was contributing, I was a little confused (more like a lot), when my lender asked me if I had my closing cost money today, 7 days before closing. I told her I thought it was taken care of by CHAPA and seller. She says, "No, seller is paying 3%, but you have to pay rest. Remember, I told you that when you applied." So here is my question. If seller is paying 3%, and I'm expected to pay the rest, what in the heck is CHAPA paying for...and if they are in fact, as I suspect, not paying for a darned thing (it is the seller, which could be negotiated in any darn loan program), why was I rushed into a sale so that I could get the CHAPA assistance when CHFA would have essentially been the same thing? I mean, on a $92,500 home, how much closing costs should there be?
Also, going back to the cash out of pocket thing, I'm doing an FHA loan, and my information on FHA states that I can 1. finance closing costs into my mortgage or 2. finance my closing costs another way. Now, seeing how I was approved for a $95,000 dollar loan, and with the closing and down payment costs bringing my actual finance cost to $86,000, I have plenty of room to work with...so why is my lender telling me I can't 1. roll it into my loan, or 2. finance it another way? She says it has to be out of my own pocket (can't be a small loan from my bank) or a gift. As if I know someone who can just hand over $2500 bucks. Can anyone out there help me?
Hi,
It is surprising to hear that everything is based on verbal information. You should have got written documents by this time. You must talk to your lender clearly and if you are not getting written documents, then I think you should cancel the loan, if possible. Consult a mortgage attorney, if required.
You may contact CHAPA directly to find out if their assistance program is being discontinued or not.
The closing costs are generally 3-5% of the loan amount. FHA loan does not always include the closing cost within the mortgage, it depends on the lender.
It is surprising to hear that everything is based on verbal information. You should have got written documents by this time. You must talk to your lender clearly and if you are not getting written documents, then I think you should cancel the loan, if possible. Consult a mortgage attorney, if required.
You may contact CHAPA directly to find out if their assistance program is being discontinued or not.
The closing costs are generally 3-5% of the loan amount. FHA loan does not always include the closing cost within the mortgage, it depends on the lender.
Hi,
I think you have a misunderstanding with the lender. So, you need to talk to her and make your point clear. And even after that you feel unsatisfied, cancel it and try somewhere else.
Wishing you Best of luck,
Larry
I think you have a misunderstanding with the lender. So, you need to talk to her and make your point clear. And even after that you feel unsatisfied, cancel it and try somewhere else.
Wishing you Best of luck,
Larry
Hi
Do you have any written documents where anything about down payment and closing cost is written?
"I found out only two weeks ago that the program was being discontinued at the end of October (this came from my lender and realtor). However, on the CHAPA web page, it states the discontinue date as September."- This is not clear to me. Can you please explain it to me?
Generally, after applying for loan, you will get Faith Estimate paperwork within 3 days or so.
I think you have not shop around for mortgage properly. You need to contact those lenders who will provide you all the needed written documents and can provide you the best rate in the market. This community also has lots of very good lenders. You can to them also.
Do you have any written documents where anything about down payment and closing cost is written?
"I found out only two weeks ago that the program was being discontinued at the end of October (this came from my lender and realtor). However, on the CHAPA web page, it states the discontinue date as September."- This is not clear to me. Can you please explain it to me?
Generally, after applying for loan, you will get Faith Estimate paperwork within 3 days or so.
I think you have not shop around for mortgage properly. You need to contact those lenders who will provide you all the needed written documents and can provide you the best rate in the market. This community also has lots of very good lenders. You can to them also.
Your lender had to send you disclosures along with good faith estimate within 3 business days of taking your application by law. The fact that they didnt is a clear violation of RESPA laws.
From what you have said you are getting a standard FHA loan wich allows a 97% purchase with 3% downpayment.
Where downpayment assistance comes in is the factor that the 3% that seller pays cannot be given to you directly from the seller so the seller has to give it to a non profit organisation such as CHAPA who in turn gives it to you to assist you with downpayment.
The other 3% seller pays for your closing costs can cover various things but depending on what your closing costs are and what lender allows to be covered some costs may be incured by you.
Typical breakdown should be something like this:
On a 90k Purchase
Total contributed by seller: 3% = $2700
Subtract the costs:
Origination 1% = $900
Appraisal = $350
Credit Report = $50
Lender Fees = $900
Closing Fee = $250
Doc Prep = $130
Title Insurance = $350
Escrow Account:
Taxes 4 months = $400
Insuranse 4 mon=$200
Mortgage INS 4 mon = $250
Prepaids:
Interest for 10 days =$170
Mortgage Registration tax = $200
Recording Fee = $80
---------------------------------------------
Total Costs = $4230-$2700 (Seller Paid) = $1530 Cash you have to bring to closing.
They might charge you more for one reason or another.
What they should have done is to have 6% seller paid closing costs (FHA allows for this) and then you whould have to bring absolute minnimum to closing.
This whole situation makes me think that you have a not so great loan officer who is not experienced with FHA mortgages and chooses to disregard RESPA laws. These guys will be out of business soon. My suggestion if you have time to wait on this purchase go with a more reputable lender. If you do chances are you will get better costs, better loan, and better service.
Good Luck.
From what you have said you are getting a standard FHA loan wich allows a 97% purchase with 3% downpayment.
Where downpayment assistance comes in is the factor that the 3% that seller pays cannot be given to you directly from the seller so the seller has to give it to a non profit organisation such as CHAPA who in turn gives it to you to assist you with downpayment.
The other 3% seller pays for your closing costs can cover various things but depending on what your closing costs are and what lender allows to be covered some costs may be incured by you.
Typical breakdown should be something like this:
On a 90k Purchase
Total contributed by seller: 3% = $2700
Subtract the costs:
Origination 1% = $900
Appraisal = $350
Credit Report = $50
Lender Fees = $900
Closing Fee = $250
Doc Prep = $130
Title Insurance = $350
Escrow Account:
Taxes 4 months = $400
Insuranse 4 mon=$200
Mortgage INS 4 mon = $250
Prepaids:
Interest for 10 days =$170
Mortgage Registration tax = $200
Recording Fee = $80
---------------------------------------------
Total Costs = $4230-$2700 (Seller Paid) = $1530 Cash you have to bring to closing.
They might charge you more for one reason or another.
What they should have done is to have 6% seller paid closing costs (FHA allows for this) and then you whould have to bring absolute minnimum to closing.
This whole situation makes me think that you have a not so great loan officer who is not experienced with FHA mortgages and chooses to disregard RESPA laws. These guys will be out of business soon. My suggestion if you have time to wait on this purchase go with a more reputable lender. If you do chances are you will get better costs, better loan, and better service.
Good Luck.
What your lender is saying about the down payment assistance programs is true, most, but not all will be shut down Oct 31. That however is totally beside the point that you have recieved nothing in writing is just a huge violation. One word..... run. Find another lender there are plenty of us who are very honest in this business and are in it to help you with basically the largest purchase of your life and want to continue servicing your needs and not just pocketing the commmission and calling it a day. Look at this as a good learning experience, at least you know how it shouldn't work.
Good Luck
Sonja
Good Luck
Sonja
I will go through this one step at a time. And you are correct for being sceptical this is a terrible situation you are in and I get mad anytime I hear of someone being treated this way.
"I'm wondering if anyone out there has some information on CHAPA and FHA. CHAPA is the program that I'm using for my down payment and closing cost assistance. I went with them over CHFA because I was told they also offer the assistance with the closing, while CHFA only helps with the down payment. I found out only two weeks ago that the program was being discontinued at the end of October (this came from my lender and realtor). However, on the CHAPA web page, it states the discontinue date as September. The October date now seems fishy to me, given the recent problems I'm having with my lender."
All down payment assitance programs are terminated as of October 31, 2007 by order of the HUD. 2 companies have been granted extensions as far as I know... they are Ameridream and Nehemiah
"For one, I never got any Good Faith Estimate paperwork from her. I pretty much got nothing from her other than verbal info."
As Eugene stated, this is against the law. I recommend reporting them to your states Department of Financial Institutions. This sounds harsh but too many brokers are still doing this. It is very unprofessional and illegal.
" In addition, I was told that CHAPA helps with both down payment and closing costs, and was told that they pay 97% and I would have to pay 3%. "
I think there was some sort of misunderstanding. When going for an FHA loan the loan is for 97% of the purchase price and the down payment is 3% total. It can be paid from a borrowers own money, a gift, or a gift from a nonprofit charity.
'I assumed this was for both the down payment and the closing from what I heard. The seller agreed to pay 6%, 3% for down and 3% for closing, and so I assumed that that was taking care of what I would have had to pay, and I would only need to pay for taxes, earnest money, and inspection fees. My lender was in the hospital and had no one else handling my loan, so I was not kept up to date on anything. Now, when I first applied, I was told that my closing costs would be $2500, not that it was required to be cash out of my pocket, so given that I was going through CHAPA and the seller was contributing, I was a little confused (more like a lot), when my lender asked me if I had my closing cost money today, 7 days before closing. I told her I thought it was taken care of by CHAPA and seller. She says, "No, seller is paying 3%, but you have to pay rest. Remember, I told you that when you applied." So here is my question. If seller is paying 3%, and I'm expected to pay the rest, what in the heck is CHAPA paying for...and if they are in fact, as I suspect, not paying for a darned thing (it is the seller, which could be negotiated in any darn loan program), why was I rushed into a sale so that I could get the CHAPA assistance when CHFA would have essentially been the same thing? I mean, on a $92,500 home, how much closing costs should there be? "
Sounds like the lender is just making excuses. You shouldn't have to pay anything out of pocket as FHA pays very good Yield spread premiums and if the lender wanted to they could help you pay for some of the closing costs.
And your right CHAPA isn't paying anything. This may be one of the all time legal scams available and that is why it is going away as of Oct. 31. All these down payment assistance programs did was shuffle money ("legally") from seller to buyer (for a nonprofit fee of course).
"Also, going back to the cash out of pocket thing, I'm doing an FHA loan, and my information on FHA states that I can 1. finance closing costs into my mortgage or 2. finance my closing costs another way. Now, seeing how I was approved for a $95,000 dollar loan, and with the closing and down payment costs bringing my actual finance cost to $86,000, I have plenty of room to work with...so why is my lender telling me I can't 1. roll it into my loan, or 2. finance it another way? She says it has to be out of my own pocket (can't be a small loan from my bank) or a gift. As if I know someone who can just hand over $2500 bucks. Can anyone out there help me?"
The only extra fee that can be financed above the purchase price is FHA's up front mortgage insurance premium. Everything else up to 6% for closing costs and 3% for down payment must come from the sellers proceeds. (well ok technically the down payment comes from the DPA programs funds then the seller pays them) Your loan amount is based on the sales price.
I know this is all very confusing so let me know what you need clarification on. Remember there are no dumb questions and I would be happy to help you in any way that I can.
"I'm wondering if anyone out there has some information on CHAPA and FHA. CHAPA is the program that I'm using for my down payment and closing cost assistance. I went with them over CHFA because I was told they also offer the assistance with the closing, while CHFA only helps with the down payment. I found out only two weeks ago that the program was being discontinued at the end of October (this came from my lender and realtor). However, on the CHAPA web page, it states the discontinue date as September. The October date now seems fishy to me, given the recent problems I'm having with my lender."
All down payment assitance programs are terminated as of October 31, 2007 by order of the HUD. 2 companies have been granted extensions as far as I know... they are Ameridream and Nehemiah
"For one, I never got any Good Faith Estimate paperwork from her. I pretty much got nothing from her other than verbal info."
As Eugene stated, this is against the law. I recommend reporting them to your states Department of Financial Institutions. This sounds harsh but too many brokers are still doing this. It is very unprofessional and illegal.
" In addition, I was told that CHAPA helps with both down payment and closing costs, and was told that they pay 97% and I would have to pay 3%. "
I think there was some sort of misunderstanding. When going for an FHA loan the loan is for 97% of the purchase price and the down payment is 3% total. It can be paid from a borrowers own money, a gift, or a gift from a nonprofit charity.
'I assumed this was for both the down payment and the closing from what I heard. The seller agreed to pay 6%, 3% for down and 3% for closing, and so I assumed that that was taking care of what I would have had to pay, and I would only need to pay for taxes, earnest money, and inspection fees. My lender was in the hospital and had no one else handling my loan, so I was not kept up to date on anything. Now, when I first applied, I was told that my closing costs would be $2500, not that it was required to be cash out of my pocket, so given that I was going through CHAPA and the seller was contributing, I was a little confused (more like a lot), when my lender asked me if I had my closing cost money today, 7 days before closing. I told her I thought it was taken care of by CHAPA and seller. She says, "No, seller is paying 3%, but you have to pay rest. Remember, I told you that when you applied." So here is my question. If seller is paying 3%, and I'm expected to pay the rest, what in the heck is CHAPA paying for...and if they are in fact, as I suspect, not paying for a darned thing (it is the seller, which could be negotiated in any darn loan program), why was I rushed into a sale so that I could get the CHAPA assistance when CHFA would have essentially been the same thing? I mean, on a $92,500 home, how much closing costs should there be? "
Sounds like the lender is just making excuses. You shouldn't have to pay anything out of pocket as FHA pays very good Yield spread premiums and if the lender wanted to they could help you pay for some of the closing costs.
And your right CHAPA isn't paying anything. This may be one of the all time legal scams available and that is why it is going away as of Oct. 31. All these down payment assistance programs did was shuffle money ("legally") from seller to buyer (for a nonprofit fee of course).
"Also, going back to the cash out of pocket thing, I'm doing an FHA loan, and my information on FHA states that I can 1. finance closing costs into my mortgage or 2. finance my closing costs another way. Now, seeing how I was approved for a $95,000 dollar loan, and with the closing and down payment costs bringing my actual finance cost to $86,000, I have plenty of room to work with...so why is my lender telling me I can't 1. roll it into my loan, or 2. finance it another way? She says it has to be out of my own pocket (can't be a small loan from my bank) or a gift. As if I know someone who can just hand over $2500 bucks. Can anyone out there help me?"
The only extra fee that can be financed above the purchase price is FHA's up front mortgage insurance premium. Everything else up to 6% for closing costs and 3% for down payment must come from the sellers proceeds. (well ok technically the down payment comes from the DPA programs funds then the seller pays them) Your loan amount is based on the sales price.
I know this is all very confusing so let me know what you need clarification on. Remember there are no dumb questions and I would be happy to help you in any way that I can.
