How NACA Operates

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Real Estate

NACA Loan Process and Requirements


NACA collaborates closely with its members to guide them through the different stages of the qualification and purchasing process.
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The NACA Workshop is the first step of a counseling and qualification process that takes several months, aimed at helping potential homeowners prepare financially for home ownership. The next step is an intake session with a NACA counselor. A NACA mortgage consultant then leads members through the qualification process, which includes a review of their payment history, debt obligations, savings, documented income, and budgeting. Counselors also carry out an affordability analysis to determine the amount of house that a borrower can genuinely afford. Borrowers are not required to make a down payment, and interest rates are guaranteed to be below 4 percent [source Appelbaum].

However, NACA does not consider credit scores as part of the application process. The greater the credit score, the better; 850 is a perfect credit score, and anything above 700 is a good credit rating. Most Americans achieve a score between 600 and 750, but NACA members usually have lower scores [source: Experian]. As of 2009, it was reported that up to 65 percent of NACA homeowners were high-risk borrowers with credit scores below 620. Nearly 50 percent of borrowers had poor credit, with scores below 580 [sources: Hogberg, Lamb]. This is a problem for major banks that approve loans for homebuyers with good credit scores only. Before the housing market crash, major lenders enticed poor-credit borrowers with unfair subprime loans, but after the crash, the Federal Housing Finance Agency (FHFA) implemented financial reform laws under the Housing and Economic Recovery Act of 2008 (HERA) in an effort to reduce the number of foreclosures and mortgages in default.

Once members qualify for NACA, they attend a Purchase Workshop, where NACA counselors explain how to search for a property (and what to do if it is a fixer-upper and requires rehabilitation), as well as how to submit a mortgage application or begin using the MAP. Members can use an NACA buyer’s agent to assist with the search, or they can bring in their own NACA-approved real estate agent. When the right home is found, this agent will negotiate the purchase price and the terms of the Purchase and Sale Agreement.

As part of the mortgage approval process, NACA Credit Access must be approved. This step ensures that the member’s financial situation has not changed and that the member continues to comply with the requirements before NACA approves the loan application. NACA, certified by the U.S. Department of Housing and Urban Development (HUD), acts as an intermediary between the borrower and lender [source: Andriotis].

Properties requiring rehabilitation are crucial to NACA’s mission of stabilizing neighborhoods, and under its Home and Neighborhood Development (HAND) program, the agency works with members to make those repairs and renovations affordable either by having them completed by the seller or rolled into the mortgage.

One of the best aspects of buying a home through NACA is arguably the below-market interest rate, which members must lock in before they purchase their home. Before submitting the mortgage application, NACA members can further lower the interest rate by making additional upfront payments, referred to as NACA Buy-Down. For every 1 percent of the mortgage paid upfront, the member receives a 0.25 percent reduction in the interest rate [source: NACA]. There is no limit — it is possible to buy down the interest to zero percent.

The NACA counselor is responsible for submitting the new mortgage to the lender. The agency processes and underwrites mortgages, acting as the mortgage broker. The borrower must secure homeowner’s insurance before closing. NACA members are responsible for escrow costs and pre-paid expenses, such as pre-paid insurance. After closing, members may take advantage of MAP’s free counseling and financial assistance for the life of the loan. This includes budgeting, forbearance, and home sale assistance. For members participating in NACA’s foreclosure-prevention program, they work with a MAP counselor to determine an affordable solution based on their financial circumstance. NACA submits the request and supporting documentation to the lender and handles the negotiations. NACA does not restructure a member’s loan.

FAQ

1. What is NACA and what does it do?

NACA, or the National Advisory Committee for Aeronautics, was a US government agency that was responsible for conducting research and development in the field of aeronautics. It was established in 1915 and operated until 1958, when it was replaced by NASA. NACA was responsible for many important advancements in aviation, including the development of airfoils, wind tunnels, and other technologies that helped to improve the safety and performance of aircraft. NACA also conducted research into supersonic flight and space exploration.

2. How did NACA contribute to the development of aviation?

NACA made many important contributions to the field of aviation during its existence. One of its most significant accomplishments was the development of the NACA airfoil, which was a new type of wing design that greatly improved the efficiency and performance of aircraft. NACA also conducted extensive research into aerodynamics, which helped to improve the design of aircraft and make them safer to fly. Additionally, NACA developed wind tunnels that allowed researchers to test aircraft designs in a controlled environment, which was a major breakthrough in aviation research.

3. What was the role of NACA during World War II?

NACA played an important role in the development of military aircraft during World War II. The agency conducted extensive research into aerodynamics and aircraft design, which contributed to the development of many important military aircraft, including the P-51 Mustang and the B-29 Superfortress. NACA also worked closely with the military to develop new technologies and improve the performance of existing aircraft. Overall, NACA’s contributions to the war effort were significant and helped to ensure the success of Allied air power during the conflict.

4. What was the impact of NACA on the aerospace industry?

NACA had a profound impact on the aerospace industry and helped to establish the United States as a global leader in aviation and aeronautics. The agency’s research and development efforts led to many important advancements in aviation technology, including the development of supersonic flight and space exploration. NACA also helped to establish the importance of scientific research in the field of aeronautics and paved the way for the creation of NASA, which continues to build on NACA’s legacy of innovation and excellence.

5. Why was NACA replaced by NASA?

NACA was replaced by NASA in 1958 as part of a broader effort to consolidate and streamline US government research and development efforts in the field of space exploration. NASA was created to take over many of NACA’s responsibilities and to focus specifically on the development of space technologies and exploration. While NACA had made significant contributions to the field of space exploration, NASA was seen as a more effective and efficient way to organize and coordinate these efforts, and it continues to be a leading force in the aerospace industry today.

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