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