HRM Short Term Escrow Holdback Program
Real estate investors who are buying distressed properties are constantly running into structural issues that the seller will correct for prospective buyers. Most of your 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 an FHA foreclosures. Sometimes HUD will cure these issues prior to putting the property on the market and sometimes it won’t. 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 “Uninhabitable” property.
Now with the new HRM 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.
- All holdbacks will require a mechanics lien
- All repairs have to be completed within 30 days
- All the funds will be held by Highlands Residential Mortgage 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 Highlands Residential Mortgage
Items that can be included in the escrow holdback:
This program is designed to allow short-term repairs done to 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 HRM Rehabilitation Program.