What is a HomePath Property and How Can I Buy One? - FAQ #11

By
Real Estate Mortgage Broker with Los Angeles & Ventura Counties in CA

What is a HomePath property and what do I need to do to buy one?

 

With nearly 800 HomePath properties available here in Los Angeles & Ventura counties and more than 50 more coming up soon, I get numerous calls/emails asking me about these properties. 

And now, Fannie Mae has special incentives for owner occupied buyers to provide 3.5% towards their non-recurring closing costs.  Just this week, I've already received a couple of calls and I strongly suspect that will continue until their special offer expires on September 30, 2011.    

For starters, HomePath properties are Fannie Mae foreclosures; these are properties that were foreclosed by a lender where Fannie Mae was the investor.  Because Fannie Mae holds these loans, they can revise their own conventional guidelines.  As a result, there are some great benefits to purchasing one of these properties. 

PROSOne of the best benefits is that HomePath only requires 3% down payment, which basically allows Fannie Mae to compete with FHA loan products.  The HomePath down payment can also be from either the borrower's own funds, a gift from a relative or from a non-profit agency, which means borrowers can use it with down payment assistance (dpa). 

The HomePath loan program also doesn't require monthly mortgage insurance (MI) or an appraisal and their condo guidelines aren't as stringent as most other loan programs (there are still some basic condo requirements).  The benefits of no appraisal or MI can eliminate some of the biggest challenges that can come up in an escrow transaction. 

While these are all wonderful advantages of using the HomePath loan program to purchase a HomePath property, these benefits don't come without some of their own challenges. 

CONS:  While the programs benefits definitely appear to be really great advantages over other loan programs, these benefits are most certainly not free.  The rates/pricing on the HomePath program is typically at least about a half a point or more higher depending on pricing adjustments than most FHA loan products. 

Furthermore, it's been my experience with this program that the reason Fannie Mae waives the appraisal requirement is that many of the HomePath properties (at least quite a few here in Los Angeles & Ventura counties) would never qualify for financing if an appraisal was required. 

It's because of the disadvantages of this program for these properties that I strongly suggest any buyer considering the purchase of a HomePath property with a HomePath loan to get a home inspection done. 

A competent and experienced home inspector will be able to discover the true property condition.  Like any other REO, don't expect Fannie Mae or their listing agents to disclose any thorough or extensive property disclosures regarding property conditions. 

Another thing that I've noticed about many HomePath properties is that they tend to be overpriced; this having more to do with the fact that there will be no appraisal required to support the price than anything else. 

Once again, I strongly suggest that before making an offer on a HomePath property, buyers still need to have their Realtors/agent run the recent comps for the area to determine what the fair market value is for the home. 

While Fannie Mae does allow buyers to use other loan programs to purchase their HomePath properties, because of some of the deficiencies of the HomePath properties, it becomes extremely difficult and in some cases impossible to use any other financing than the HomePath loan program. 

As I said before, under standard Fannie Mae or FHA guidelines, many HomePath properties would never qualify for financing.  It's because of this that Fannie Mae devised the whole HomePath program. 

If you can tell, I am not a big fan of the HomePath program for a buyer who can't afford to bring these homes to minimum building code standards and that is primarily because many of the HomePath properties that I have personally seen are no different than all the other run-down, dilapidated, dumpy REO's on the market. 

For most of my borrowers, who are typically low-medium income buyers, many of which are using down payment assistance to purchase their first home, this is not the kind of home that they can afford to buy.

However, for an investor, this is a great program and I highly recommend it for the first time investor who is looking to establish their real estate investment portfolio, especially the all-cash investor.  Fannie Mae loves all-cash investors. 

Buying a home is one of the most important decisions someone can make.  Today's real estate market can be really scary, which is why it's important to get as much information as possible before starting your search.  The home buying process is not a simple process and it's because it can get really complicated and convoluted, that borrowers today need affordable loan options that are best suited for their own needs. 

If you have any questions and/or concerns, please feel free to contact me, Donne Knudsen, at 805.2069123 or donne4loans@earthlink.net.  That's what I'm here for and I would love to be able to assist you in your search for an affordable home loan. 

 

 

What Kind of First Time Buyer Programs are Available in Los Angeles & Ventura Counties? FAQ - #1

What kind of property can I buy? FAQ - #2

What Kind of Paperwork Do You Need to Pre-Approve Me? FAQ - #3

Why Do I Have to Get Pre-Approved with Other Lenders I Don't Want to Use Before I Can Make an Offer on a Property? FAQ - #4

What Kinds of Things Can Go Wrong in the Loan Process? FAQ - #5

What are Impound Accounts & Why Do I Need to Have Them in Order to Close My Loan? FAQ - #6

Can You Help Me Get My Kid Get Out of My House? FAQ - #7 

I'm Supposed to be Closing Next Week Can You Help Me? FAQ - #8 

If I Buy a Duplex, Can I Apply the Tenants Rent Towards My Mortgage? FAQ #9

What Happens if My Appraisal Comes in Low? - FAQ #10

Can I Still Get a Loan if I Don’t Have Perfect Credit? – FAQ #12

Are There Still Loan Programs Where I Don't Have to Put Anything Down? - FAQ #13

 

Photos courtesy of flickr:   HomePath   nadinereilly   carolyncoles   giacomomacis

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~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

 Donne Knudsen

Realtor® - CalState Realty Services

DRE#: 01364050 / NMLS#: 249822 

 

805.2069123

 

E-mail   My Blog  

Serving low-medium income individuals and families as well as first time buyers with both their real estate as well as their mortgage needs including down payment assistance

Los Angeles County  --  Ventura County

© 2010 - All Rights Reserved

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Re-Bloggged 5 times:

Re-Blogged By Re-Blogged At
  1. Andi Grant 04/13/2011 04:03 PM
  2. Jane Peters 04/13/2011 09:18 PM
  3. Jane Grant 04/26/2011 11:51 PM
  4. Don Sabinske 10/20/2011 05:25 PM
  5. Joyce Kelley 12/30/2012 08:50 PM
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Topic:
Real Estate General Information
Location:
California Ventura County
Groups:
1st Time Buyers
Advice for Buyers
First Time Homebuyer
Posts to Localism
Southern California Real Estate Forum
Tags:
faq
fannie mae reos
homepath properties for sale
homepath
ventura county
los angeles county

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Rainmaker
598,584
Donne Knudsen
CalState Realty Services
Los Angeles & Ventura Counties in CA

Jan - I'm hoping my post helps Realtors as well as prospective buyers in my market learn more about the HomePath program.  There are definitely advantages and disadvantages to this program but for some buyers, it's just another loan option.

Iris - I still have mixed feeling about so many of these properties because they are quite honestly pigs with lipstick on them.  However, there are some that aren't so bad looking.  For condos, it's pretty much the only game in town.

Thx for stopping by ladies; I really appreciate it.  Have a good night and a wonderful week too!  :)

October 26, 2011 12:42 AM
Rainmaker
812,709
Joyce Kelley
Buyers Agent 800-309-3414 Pace and Gulf Breeze,Fl.
Charles Stallions Real Estate Services Inc

Wow I did not know these things and  have not done one except with an investor and he didn't care. But now I will look at the Homepath a little different.

January 01, 2013 11:35 AM
Rainmaker
267,676
Inna Ivchenko
Los Angeles / Valley Homes
Mannis Real Estate Group

Very nice blog post about Homepath properties.

There are few of them and first time buyers definitely like them and take advantage of a low down payment, assistance with closing costs, no appraisal. There are cons and pros of working with Fannie houses or buying them. I'd recommend to work with a Realtor who knows what he/she is doing. Paperwork can be very tricky.

February 08, 2013 09:57 PM
Rainmaker
267,676
Inna Ivchenko
Los Angeles / Valley Homes
Mannis Real Estate Group

I wonder if anyone had a successful Homepath renovation finding and can share their story.

I'm right now trying to get one. REO agent doubt that we can get it and hoping we'll fail since she had 2 cash offers in backup. I tried to find anything here on AR, but nothing so far. We got everything well, the only contingency left: financing.....hope, our lender knows what he is doing....

February 08, 2013 10:07 PM
Rainmaker
227,129
Ken Barker Realtor® GRI, E-Pro Certified
Dilbect Real Estate

Inna - I couldn't agree with you more about the challenges of working on a HP transaction - they are indeed tricky.  Having worked on a few HP transactions (some successfully and others not so successful), there are just so many factors to that can derail the transaction and there are so many details that must be attended to. 

HP properties are not for everyone and here in Los Angeles, the market is especially frustrating.  So many of the HP properties are run-down dumps that are simply not eligible for traditional financing and can only go HP and then it becomes a question of whether or not the buyer wants the property enough to overpay for a money-pit. 

February 09, 2013 11:24 AM
Anonymous
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Rainmaker
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Donne Knudsen

CalState Realty Services
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