Gifts Gifts of Equity Presented By Add Your

Gifts & Gifts of Equity Presented By: [Add Your Name, Title, Company & NMLS Here] 1

Increase Your Business, Help More People! Properly Structuring Gifts & Gifts of Equity Is A Great Skill to Learn & Will Increase Your Ability to Assist More Buyers and Sellers! 2

Gifts and Gifts of Equity Gifts are just what they imply, a monetary gift to help someone buy a home. Gifts of Equity are also gifts, but instead of cash, a portion of the equity in the home is given to the new homeowner. This can be a percentage of the equity or the entire amount. 3

Interested Party Contributions are contributions made by anyone who may have an interest in the transaction. These contributions may apply to equity, cash or personal property. Real Estate Agent Builder/Developer Any Other Third Party Basically anyone that would benefit as a result of the contribution may be considered an Interested Party. This DOES NOT Mean that an Interested Party cannot give a gift, only that there may be restrictions on that gift. 4

Familial Status Some Programs Define “Who is Family” which determines who can give the gift. Other Programs have No Familial Status requirements and anyone can give the gift. 5

Limitations on Gifts Varying Loan Programs May: • Limit the amount of the gift. • Allow only closings costs to be a gift. • Allow both the down payment and closings costs to be a gift. Property types may be limited When interested parties provide a gift there may be restrictions. Borrower’s contribution may be required Understanding the differences between the programs is what helps your clients find the right loan for them. 6

Fun Facts! Freddie Mac: • The Most Flexible Conventional Option when a Gift is from an Interested Party. However, they do apply limits. FHA: • • Neither Freddie Mac or Fannie Mae allow a gift from an Interested Party to be used for a down payment. • Does Not Require Borrower’s Own Funds on 1 -4 Unit Properties. (except on an IPC & Home. Possible® Program) • Allows Wedding Gift Funds & Does NOT Require Donors to be a Family Member. Added Bonus: They Do Not Limit the Amount! Will allow the real estate agent, who is also an eligible family member, to gift their real estate commission to the borrower for Closing Costs & Down payment. • Used to Allow Wedding Gifts but Their New Guidelines are Silent on the Subject? • Fiancé or Fiancée are Not Considered Family Members. USDA & VA Do not Require Donors to Have Familial Ties 7

Conventional Loans – Fannie Mae & Freddie Mac Family Status • • • Borrower’s Spouse Fiancé or Fiancée Domestic Partner Child or Other Dependent Any Individual Related by Blood, Marriage, Adoption or Legal Guardianship. Gifts & Gifts of Equity Can be Used For: • Freddie Mac - Not considered IPC if seller has no affiliation with other IPCs • F&F do not distinguish guideline differences on a gift vs. a gift of equity. 8

FHA Loans Gifts Can be Used For: Gifts of Equity • Child, Foster Child, Parent or Grandparent • Primary Residence • Spouse or Domestic Partner • Gifts can be used for down payment & closing costs. • LTV is Limited to 85% UNLESS: • Borrower purchases the principal residence of another family member. • Purchasing Family Member has been Renting Residence 6 months prior to Sales Contract Date. Family Status • Legally Adopted Son or Daughter • Brother, Stepbrother, Sister, Stepsister • 1 -4 Units • Minimum Borrower Investment is 0% • Uncle or Aunt • Cash on Hand – Not Accepted • In-Laws (Son, Daughter, Father, Mother, Brother, Sister) • May not be used to fulfill reserve requirements if required. 9

VA & USDA Loans Family Status • Only Stipulation is that the person giving the gift or gift of equity is not affiliated or does not have an interest in the property or transaction. Gifts Can be Used For: USDA Gifts of Equity USDA • No Property Restrictions • Cannot be Used for Required Reserves VA • No Restrictions or Guidance VA • Appraiser must be aware of equity gift. • Borrower may not receive cash back at closing. • No Guidance 10

Company Logo [Click “Insert” then “Picture”] Your Contact Information: Name: NMLS #: Company: Email: Cell: Direct: Connect With Me on: [hyperlink each social media icon to your page] 2019 Flanagan State Bank, all rights reserved. 2019 Mortgagecurrentcy. com (author of presentation) all rights reserved. The information contained in the presentation is meant for real estate professionals only and not intended for consumer distribution. 11