1. What does FELBA stand for?

Federal Loan Buydown Authority

2. What is the cost?

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.

3. What are the advantages to the buyer and seller in using FELBA?

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.

4. What are the tax consequences of the transaction?

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.

5. Who is BB&T?

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.

6. Is the escrow agreement negotiable?

In order to keep the costs down, the escrow agent and FELBA have determined that the escrow agreement is not negotiable.

7. When do we receive monies and how?

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.

8. Can I see the balance of the escrow account online?

Yes, the recipient can receive "TAMLINK", which is BB&T's statement system.

9. Why FELBA? Can't the buyer and seller do the same thing?

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.