John Interviews Pemco's Velicia Williams about the common mistakes agents make with a HUD contract.

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JOHN:  Hey, John Jones here and I’ve got a treat for you today.  I have Velicia Williams who is the contract manager with Pemco.


 JOHN:  Who is one of the largest asset managers in the country, one of the big asset managers for HUD.  So today, we’re going to be talking about HUD contracts.  As we are a listing agent for HUD homes, I thought it would be good to hear some things from the people here doing the work.  And so what I wanted to know from Velicia is what are two or three of the most common mistakes that you see with the contracts that come in that has to give you reason to kick them out?

 VELICIA:  Well, most of the common reasons would be the social.  The buyer has the wrong social identified on the contract.  And other thing is the type of financing.  A lot of lenders will tell the clients who select a certain type of financing that’s not really an option because if the property was listed uninsured, the only FHA financing available at that time if they’re owner/occupant would be 203K financing.

 JOHN:  Okay.  So if for some reason if the contract comes—if it’s uninsured and it comes through as conventional loan, guess what?

 VELICIA:  No, uninsured is conventional.

 JOHN:  Okay.  Conventional is….

 VELICIA:  Uninsured and also cash.  So that would fall up under the insured.

 JOHN:  Okay.  So you’re okay there.

 VELICIA:  Right. 

 JOHN:  If it came in as a straight FHA deal, then you would say no go?

 VELICIA:  Correct.

 JOHN:  And kick it back.

 VELICIA:  Well, we wouldn’t kick it back.  We do give them the opportunity to correct the file.  They have 48 hours.

 JOHN:  Forty-eight hours.  Okay, that’s crucial.

 VELICIA:  They’ll receive an e-mail notification allowing them 48 hours to make that correction.  Now they only get one opportunity.

 JOHN:  Okay.

 VELICIA:  After that initial opportunity, if it comes in incorrect or incomplete, then it’s an automatic cancellation.

 JOHN:  Okay.  What about if the social is one digit off?

 VELICIA:  If it’s one digit off, it’s an automatic cancellation.

 JOHN:  It’s a cancellation.


 JOHN:   There’s no 48-hour grace period to fix it.  Correct?


 JOHN:  Okay, and then what is the other thing?  We were talking earlier about the names?

 VELICIA:  Yes.  If it’s an owner/occupant sale and you have conventional or cash financing, you cannot identify a co-borrower on Line 2 of the contract.

 JOHN:  Okay.

 VELICIA:  The only time that you can identify a co-borrower on Line 2 of the sales contract is if the client is doing FHA financing.

 JOHN:  Oh, I got you.  Okay.

 VELICIA:  Right.

JOHN:  So if that happens….

 VELICIA:  If that happens, usually we will ask them to remove that client from Line 2, and we’ll tell them the easiest way to handle that is to have it quick claimed at closing, meaning add that buyer after the file closes.

 JOHN:  I got you.  Okay.  Man, that’s some great information.

 VELICIA:  Thank you.

 JOHN:  And thanks so much and Pemco I will say does a fantastic job.  So if you’re out there and you’re an agent or a buyer, don’t be intimidated by buying a HUD home.  These beautiful people like Ms. Velicia make the process very easy.  Thanks a lot.

VELICIA:  Thank you.