EARNEST MONEY FOR HUD HOME CONTRACTS

The required earnest money deposit the selling broker must secure from the Purchasers prior to bidding on a HUD home on their behalfis either $500 (for homes of a sales price less than $50,000) or $1000 (for homes of $50,001 or more).

There is a required addendum that Purchasers must sign and include in the contract package stating the policy that determines if the Purchaser's deposit will be refunded or forfeited to HUD as follows:

A: Owner Occupant Purchasers

   1) The entire deposit will be returned, if requested in writnig within 15 days, with adequate documentation included when:

• There has been a death in the immediate family (purchaser, spousem or a child that resides in the same household);
• There has been recent serious illness in the immediate family that ahs resulted in significant medical expenses or substantial income loss, adversely affecting the Purchaser's financial ability to close the sale;
• There has been a loss of job by one of the primary breadwinners, or substantial loss of income through no fault of the Purchaser;
• On an INSURED sale (FHA financing) HUD (or Direct Endorsement underwriter) determines that the Purchaser, in spite of having a pre-qualification letter, is not an acceptable borrower, or
• On an UNINSURED SALE (non FHA financing) the purchaser was pre-approved for mortgage financing in an appropraite amount by a recognized mortgage lender and, despite good faith efforts, is unable to obtain mortgage financing. "Pre-approved" means a commitment has been obtained from a recognized mortgage lender for mortgage financing in a specified dollar amount sufficient to purchase the property, or there is other equally good cause, as determined by Southwest Alliance, in keeping the spirit and intent of the above policy.

2)   On an UNINSURED sale, the Purchaser forfeits 50% of the deposit in those instances where, despite in those instances where, despite good faith efforts by the Purchaser, there is an inability to obtain a mortgage loan from a recognized mortgage lender.

3) On either a INSURED OR UNINSURED sale, the Purchaser forfeits 100% of the deposit in those instances where no documentation is submitted, where the documentation fails to provide an acceptable cause for the Purchaser's failure to close, or where the documentation is not provided with a reasonable time following contract cancellation.

B: INVESTOR PURCHASERS

 1) Unisurable Sales - The Purchaser forfeits 100% of the deposit for failure to close, regardless of reason.

 2) Insurable Sales - The Purchaser forfiets 50% of the deposit for failure to close if the Purchaser is   determined  by HUD (or a DE underwriter) to be an unacceptable buyer. The purchaser forfeits 100% if the sale fails to close for any other reason.

 3) Vacant Lots - The Purchaser forfeits 100% of the deposit.