gem presentation pdf
TRANSCRIPT
The Gift Equity Mortgage
Only available for buyers purchasing owner occupied properties that qualify as GEM REOs
Allows equity in the home being purchased to be gifted to the buyer from the seller/REO owners
Allows the market value/appraised value to become the basis or purchase price in establishing the Loan to Value
Reduction or elimination of private mortgage insurance
Example: Based on $150,000 property Purchase agreement is written and accepted
between seller/REO owner and purchaser for $150,000
Appraised value comes in at $150,000 Seller’s “security position ” is $125,000
(security position is the pre-determined amount of cash funds to the REO owner from the new mortgage of the owner occupant borrower. Balance in forgivable soft second)
Subtract security position from the purchase price/appraised value to determine the “Gift Equity”
Security position becomes the mortgage amount
$150,000 Appraised Value/Sales Price $125,000 Security Position/Mortgage Amount $25,000 Gift Equity
Lower monthly payment will broaden purchasing opportunity
Purchase price reflects actual property value which will
I. Result in true property tax value II. Lower tax rate to the value of the property III. Maintain value of neighborhood IV. Rid neighborhood of vacant housing V. Allow the owner occupant to obtain immediate
equity VI. Smaller loss to the REO owner VII. Smaller bailout to REO owners from government
Sample Monthly Payments
$85.25 Mo. Savings
Interest Rate with the GEM is reduced due to the down payment MI is lower due to LTV Property value is maintained
With GEM Example #1 83% LTV Sales Price $150,000 GEM $25,000 Loan Amt $125,000 P&I $779.84 (6.375%) MI $38.54 (.37%) TX $125.00 Haz. Ins. $50.00 Payment $993.38
Without GEM Example #2 100%LTV Sales Price $125,000 GEM $0.00 Loan Amt $125,000 P&I $842.15 (7.125%) MI $61.46 (.59%) TX $125.00 Haz. Ins. $50.00 Payment $1,078.62
Borrower: I. Lower payments and/or more home II. No out of pocket down payment III. Instant equity IV. Tax incentive
Neighborhood: I. Accurate property value keeps up
neighborhood value II. Crime rates drop with reduction of vacancies III. Occupied homes are maintained for
neighborhood aesthetics
Tax payers: Lower tax rate Financial Institutions: Quicker turnover and
lower inventories on REOs Government: I. Taxes based on actual market value II. Taxes paid through escrows III. Keeps active housing market for economical
growth IV. No government stimulus needed
Targeting REO properties in all 50 states Target customer base: Fannie Mae, Freddie
Mac, Ginnie Mae, Mortgage insurance companies, government owned, credit unions and banks.
Advertising: MLS, sales presentations, networking, TV, radio, mailings and web presence, GEM on all REO owner websites (Fannie Mae, Freddie Mac, Ginnie Mae, AIG and Genworth)
Every listing must have interior/exterior photos, GEM signage, home warranties (paid by REO owners for borrowers)
Regulated guidelines on all GEM property advertising