Buying a Foreclosure that Still Needs Rehabilitation

What if I find a foreclosure that is not rehabbed in the POP Program but still needs repairs?

First, make sure the address is in eligible NSP area by checking the address at http://gis1.pascocountyfl.net/nshood/. Once this is determined, a contract is written and the lender reserves funds for you, a County employee will come to the property and perform an inspection to see what repairs are needed. Among eligible repairs that can be done include: correcting substantial code violations, such as bad roofs and ceilings; upgrading electrical, heating sewer or water facilities; making handicapped modifications; and fixing any other deficiencies. Homes must meet County rehabilitation standards. Working with you, the County staff will complete a work write up and rehabilitation specifications. If it is necessary, the County’s consulting architect will complete the work write-up for items that may need an architectural seal on the plans.

The County is able to lend up to a combined loan to value of the bank and lender’s loan of 100%. This is based on the appraisal of the home post-construction. The lender may not allow for the loan to value to be that high – please check with your lender.

At closing, you will sign two loans: one with your financial institution and one with the County based on the estimated amount of the rehabilitation (and down payment and closing costs needed). Immediately after closing, the process of contractor selection shall begin. If you have a contractor in mind, and his bid is within ten percent of the County’s estimate, you may select him if he meets the county’s criteria. If you do not have a contractor in mind, we will bid out the project on your behalf to a list of over 30 contractors that are on the County’s contractor list. An open house will be held at your property, giving the contractors the opportunity to take a look at your home. Bids are submitted to the County, and you may select any contractor within 10% of the County’s estimate. If possible, the bidding process will occur before your closing and you can choose a contractor immediately after closing.

After you select a contractor, you will sign a contract with him. Depending on the size of the job, it may take up to 90 days to complete, but usually it does not take longer than 45 days. Both you and the County must approve all payments to the contractor. This is in addition to the City or County building inspectors. At final payment, the contractor obtains a release of lien from all subcontractors and delivers all material warranties. The contractor warranties all work that he

has done for one year from final inspection.

Living in a home under construction is very stressful, and it also makes it difficult for a contractor to complete his work. For that reason, the County will give you a grant of up to $1,000 per month to live somewhere else during construction.

It needs to be noted that under no condition can the homebuyer assistance and the rehabilitation assistance from the County exceed 50% of the sales price.

Financing programs must allow repairs after closing and must allow Pasco County Community Development to hold the repair escrow and allow county inspectors to make all inspections. Please check with your lender to insure this is the type of financing you have applied for. Not all lenders have the rehab programs needed to administer the NSP program.