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Home assistance grants are becoming the bane of my existence.
What happens, SC (or SC's lender) finds a program that is going to give them money to fix up their house, pay towards the down payment of their house, etc. Could be just a couple thousand. Could be tens of thousands. But it is a grant. It does not need to be paid back... so long as you meet the terms of the agreement.
Really nice programs, actually, when I think of them outside the perspective of my own job. But the governing authority making those grants don't want them to go to investors who will just turn around and sell the house. The point is to try to build up some market stability and recover a neighborhood.
So, one of the conditions is pretty much always that you must own and reside in the property for X number of years, else you will have to pay them back after all.
So, you sign the mortgage and the terms, and you get your money and fix up the house. And then, 1, 2, 3 years down the road you decide you want to do more.
You want to get a home equity loan.
And we do a title search, and it comes back that you have a "Fix-up-neighborhoods-R-Us Grant" MORTGAGE against your house.
You know, that one you signed a few years back.
Well how do you THINK they were going to track whether or not you were an investor trying to use their grant to flip houses instead of following the agreement to keep the house for X number of year?
No, I realize it is not a loan, but it is a mortgage.
Loan = borrowing money with some sort of terms of repayment.
Mortgage = they can take your house if you do not follow X agreement.
Sure, normally the terms of the agreement are loan terms, but in the case of the grant, the terms are... well, look. Here's a copy of the public record of the mortgage you signed. Most of the terms are actually spelled out right here.
Oh look! It even talks about how you aren't supposed to borrow new money against the house during the term of the agreement.
Not that we'd be doing our loan anyway. Because one of the risks of the home equity is if you happen to foreclose on your house, the first mortgage gets their share 1st. Then we are supposed to get our share, if there is any. But that much is calculated in our risks. What is not calculated is the first mortgage getting their share, THEN the assistance grant claiming back their money because not paying your 1st mortgage is another reason they can force repayment. Pushes our loan position down into the realms of unsecured loan.
So we don't do it.
You want us to do the home equity anyway? Okay! Get a payoff for the grant so they'll release their mortgage early and we'll proceed. Yes, the grant that you don't have to pay back at all if you just wait it out. If we pay that off with the home equity loan, then all is well and we can do this.
Ah, you'd rather wait.
Okay.
Seriously people, I get that paperwork is confusing, but when you sign a form that has the word MORTGAGE printed in big bold letters on the front, you should at least realize that it is, in fact, a mortgage that you are signing. This is NOT a fine print issue. *sigh*
What happens, SC (or SC's lender) finds a program that is going to give them money to fix up their house, pay towards the down payment of their house, etc. Could be just a couple thousand. Could be tens of thousands. But it is a grant. It does not need to be paid back... so long as you meet the terms of the agreement.
Really nice programs, actually, when I think of them outside the perspective of my own job. But the governing authority making those grants don't want them to go to investors who will just turn around and sell the house. The point is to try to build up some market stability and recover a neighborhood.
So, one of the conditions is pretty much always that you must own and reside in the property for X number of years, else you will have to pay them back after all.
So, you sign the mortgage and the terms, and you get your money and fix up the house. And then, 1, 2, 3 years down the road you decide you want to do more.
You want to get a home equity loan.
And we do a title search, and it comes back that you have a "Fix-up-neighborhoods-R-Us Grant" MORTGAGE against your house.
You know, that one you signed a few years back.
Well how do you THINK they were going to track whether or not you were an investor trying to use their grant to flip houses instead of following the agreement to keep the house for X number of year?
No, I realize it is not a loan, but it is a mortgage.
Loan = borrowing money with some sort of terms of repayment.
Mortgage = they can take your house if you do not follow X agreement.
Sure, normally the terms of the agreement are loan terms, but in the case of the grant, the terms are... well, look. Here's a copy of the public record of the mortgage you signed. Most of the terms are actually spelled out right here.
Oh look! It even talks about how you aren't supposed to borrow new money against the house during the term of the agreement.
Not that we'd be doing our loan anyway. Because one of the risks of the home equity is if you happen to foreclose on your house, the first mortgage gets their share 1st. Then we are supposed to get our share, if there is any. But that much is calculated in our risks. What is not calculated is the first mortgage getting their share, THEN the assistance grant claiming back their money because not paying your 1st mortgage is another reason they can force repayment. Pushes our loan position down into the realms of unsecured loan.
So we don't do it.
You want us to do the home equity anyway? Okay! Get a payoff for the grant so they'll release their mortgage early and we'll proceed. Yes, the grant that you don't have to pay back at all if you just wait it out. If we pay that off with the home equity loan, then all is well and we can do this.
Ah, you'd rather wait.
Okay.
Seriously people, I get that paperwork is confusing, but when you sign a form that has the word MORTGAGE printed in big bold letters on the front, you should at least realize that it is, in fact, a mortgage that you are signing. This is NOT a fine print issue. *sigh*
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