Federal Loan Buydown Authority
FELBA charges the greater of 1/10 of 1% of the first mortgage loan amount or $20,000. FELBA pays for BB&T's escrow costs of $2,000 per year per transaction.
Advantages to the Seller: The most significant advantage to the seller is they can avoid a prepayment penalty or defeasance. A seller using FELBA can generate a loan assumption price at or near the all cash price. FELBA allows the seller to sell a property with an amortizing loan, and give the buyer the same economics as if the property were unleveraged.
Advantages to the Buyer: The buyer pays the same, or a slightly lower sales price than would be warranted on an unleveraged transaction. Even though the payments to the buyer from the FELBA transaction may equate to the principal on the underlying loan, the actual paydown of principal benefits the buyer. This benefit carries forward in future IRR calculations and subsequent sales.
FELBA makes no specific warranty as to the tax treatment. Please consult with your tax advisor for your specific set of circumstances. However, it is our understanding that since this transaction is set up at closing, and is basically a transfer of funds from seller to buyer, it can be treated as a reduction of basis.
BB&T is one of the largest financial services holding companies in the United States with $185 billion in assets and market capitalization of $29 billion. Based in Winston-Salem, N.C., the company operates 1,824 financial centers in 12 states and Washington, D.C. BB&T is a Fortune 500 company.
In order to keep the costs down, the escrow agent and FELBA have determined that the escrow agreement is not negotiable.
Monies can be transferred via wire, check, or ACH. They will be received on or before the first of the month, as shown on Schedule A of the escrow agreement.
Yes, the recipient can receive "TAMLINK", which is BB&T's statement system.
Yes. However, FELBA is the desired alternative. The escrow agreement with BB&T has been researched, negotiated, and established, along with the protocol. FELBA pays the escrow fees. Additionally, the FELBA team is available to walk buyers and sellers through the hassle free process. This service is provided at a cost that is less than the cost of typical title insurance.