Fannie Mae Home Path Property - Pros and Con... Artists?

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Real Estate Agent with 310-508-4354 | FirstTimeHomeBuyerRealEstate.com BRE# 01728424

 

Fannie Mae Home Path Property - Pros and Con...Artists?

 

I am writing this in response to a very detailed article posted by Donne Knudsen titled "What is a HomePath Property and How Can I Buy One? - FAQ #11" regarding the Pros and Cons of buying a Fannie Mae HomePath property. 

PROS:  Lower down payment requirement; No mortgage insurance or appraisal required.  Wow!  How kind of them.

CONS: Most homes in my market I've come across or others I know have come across have been down-right lemons or major fixers in my opinion.

My Recent Fannie Mae HomePath Deal:

About 2 and 1/2 months ago, my first-time homebuyer was in an escrow with a Fannie Mae property.  The home was GORGEOUS!  It was everything my buyer was looking for in style, move-in condition appearance, area and price. She was coming out of a lease and there was a deadline. We submitted an offer. Wonderful...until I noticed a few things just before and after a week into escrow.

AGENT BEWARE: 

  • Higher than Standard Good Faith Deposit Required
  • Shortened Contingency deadlines (from 17 days to 10 calendar days)
  • Stall tactics ie. seller/listing agent sending docs after normal business hours (it seemed like Friday after normal business hours was the magic day); days waiting for simple responses with no communication from anyone)
  • Acknowledgement Date v. Received Date: There is a difference! Instead of contingency clock ticking from date of received acceptance of signed purchase offer, contingency clock started ticking from acknowledgment date stated on addendum which conveniently for the seller was dated several days prior to us receiving the actual addendum to sign. After we finally got a fully executed offer, we only had 7 days to schedule and complete inspections, get the reports back, request repairs, get a response and renegotiate terms

BUYER BEWARE:   

What the pretty house revealed in inspections underneath her makeup (new carpet and paint).

  1. Section I termite findings - major infestation, costing a couple thousands dollars.
  2. Bad plumbing, heavy leaking and pools of water under the entire house, fungus on rotted beams - several thousands of dollars.
  3. Damaged Heating and Venting - severely damaged and permanently plugged - estimated cost several hundred dollars. 

I wondered if this was why there were so many enticing incentives for this Fannie Mae HomePath home and the push to use their program.  The fewer people who see the home i.e. apprasiers, FHA inspectors (they require mortgage insurance), home inspectors, the less chance of exposure to the real costly issues of the home. Is this simply a scam by legal con artists? 

OTHER REALTORS:  I have spoken to several Realtors local and out-of-state who've also experienced severely damaged homes revealed during inspections of a Fannie Mae HomePath home.  Another reason why I can't stress enough for buyers to get their home professionally inspected.  If a buyer has the reserves to fix a home, this can be a great thing if priced below market, otherwise run!

Needless to say, my buyer wisely agreed to withdraw her offer and start a new search. The home immediatley went back on the market for $40K less than original price. It would've cost them thousands less just to fix it.  Who is doing the math at Fannie Mae? Lucikly my buyer got her happy ending.  Just two weeks ago, she moved into a great home the inspector couldn't stop complimenting.  She is now a happy homeowner.

______

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Andi Grant Rea Estate aGent Realtor

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Show All Comments
Rainmaker
154,671
Simone Bercu
Keller Williams Capital Properties - Bethesda, MD
Montgomery Co, MD Real Estate - GRI, e-PRO, AB

Very interesting.  I am working with a buyer now on a forclosed property.  The buyer did not take the HomePath loan. There were moments when we wondered if the buyer would have been better off using the HomePath financing.  However, reading this blog convinced me that the buyer relying on other funding was a good choice.  Thanks for sharing.

 

Apr 13, 2011 09:00 PM #1
Rainmaker
209,779
Andi Grant
310-508-4354 | FirstTimeHomeBuyerRealEstate.com - Long Beach, CA
First Time Home Buyers Los Angeles, Long Beach

Simone, according to Donne, she's read blogs of other agents singing their praises so maybe it depends on the market and who is handling those markets for Fannie Mae.  When checking where the FM fans were located, none were here in the Los Angeles area where in my opinion, we have seen more lemons than lemonade.  One agent just closed and his buyers found out there was permanent clogging in the pipes due to cement.  Somehow it was missed in inspections when the inspector tried the water. Maybe they didn't run the water long enough or needed to flush more before all water stopped flowing.

I feel bad for the homebuyers who will be vitimized again this go-round.

Apr 13, 2011 09:08 PM #2
Rainmaker
598,882
Donne Knudsen
Los Angeles & Ventura Counties in CA - Simi Valley, CA
CalState Realty Services

Andi - Great follow-up!  Wow, could I tell you stories of my experiences, not all that different than yours.  One of my clients who actually went through with their transaction, even after a horrible inspection report, was telling my by end of the transaction that he wished he listened to me and walked away after the inspection.

Don't even get me started on some of HP's funky rules and regs.  I too had a hard time with the reduced contingencies and the "acknowledged" date and the "fully-executed" because as you and I know, we can't start the process on a verbal agreement, we have to have the signed contracts.

Apr 13, 2011 11:48 PM #3
Ambassador
591,737
Mona Gersky
MoonDancer Realty, Dillsboro,NC - Sylva, NC
GRI,IMSD-Taking the mystery out of real estate.

Andi, good post.  My buyers just closed on a Fannie Mae house in Franklin, NC.  Before we even made the Offer, I reviewed the Addendum with them and insisted that they go ahead and make arrangements for their inspections.  I figured if the offer wasn't accepted, it would be easier to cancel the inspections than to take the chance of getting everyone scheduled if it WAS accepted.

The listing agent was a breeze to work with as were my buyers. Agents need to walk into these things with eyes wide open and pay attention to any hairs raising on the back of your neck!

Apr 14, 2011 12:08 AM #4
Rainmaker
209,779
Andi Grant
310-508-4354 | FirstTimeHomeBuyerRealEstate.com - Long Beach, CA
First Time Home Buyers Los Angeles, Long Beach

Mona - you were lucky.

The listing agent only responded ONCE via email and that was after threat to withdraw the offer. Up until then ALL of my dealings were with a licensed assistant who acted as if she hated her job. She would heave a deep sigh when you asked her a general but necessary question like about scheduling the appraisal. At one point she even said she was only the middleman. I told her she was apparerly all I had since the listing agent wasn't communicating with me, the tc, anyone. They were a very rude and unprofessional team. She also had an aggressive exchange with the lender who is one of the nicest and most professional people you could ever meet. Ridiculous.

Apr 14, 2011 01:28 AM #5
Rainmaker
209,779
Andi Grant
310-508-4354 | FirstTimeHomeBuyerRealEstate.com - Long Beach, CA
First Time Home Buyers Los Angeles, Long Beach

Donne - the ones I encountered were very slick and snakey.

Apr 14, 2011 02:06 AM #6
Rainmaker
1,287,647
Carla Muss-Jacobs, Principal Broker/Owner
BuyersAgentPortland.com | (503) 810-7192 Portland Metro Exclusive Buyers Agent | 100% Buyer Representation ~ 100% o... - Portland, OR
Buyer Focused ~ Buyer Results

I just had a buyer terminate the Fannie Mae owned property.  The "acknowledgment date" of the contract was given after 5:00 pm.  on Friday, the inspection periodstarted to run on the acknowledgment date, not the date the offer was fully executed -- which came 3 days LATER.  The home inspection run on the 'acknowledgment date' -- and there's NO ONE anyone can act on that until Monday.  They cut the inspection date from 10 business days (which is the norm here) to 10 CALENDAR days . . . effectively pruning off 2 days.  After acknowledgment date it was Sat., and Sun.  Again, no one can schedule a home inspection on a weekend.  The following week was 5 days, then the weekend again, since they counted on calendar days.  Negotiations had to be done the following Monday.  With another 2 days for the weekend, when -- conveniently no one works at Fannie Mae over the weekend.  After this experience, I started to wonder about the transaction.  I'm glad the client terminated. 

Apr 14, 2011 08:57 PM #7
Rainmaker
209,779
Andi Grant
310-508-4354 | FirstTimeHomeBuyerRealEstate.com - Long Beach, CA
First Time Home Buyers Los Angeles, Long Beach

Carla - You just described my transaction!!!!  Terrible. 

Apr 15, 2011 01:44 PM #8
Ambassador
412,925
Tammy Emineth
Personal SEO - Website SEO and Real Estate Marketing - Marysville, WA
Content Marketer, SEO Teacher, Website Fixer

Wow, very detailed and informative post Andi! Perfect for those considering buying with type of financing. It can be scary what's out there... good thing you are so careful for your buyers. I also wanted to thank you for your subscription! I really value and appreciat it! :)

Apr 15, 2011 09:17 PM #9
Ambassador
1,476,553
Renée Burrows
Savvy Home Strategies Realty, LLC-REALTOR®-Estate-Probate - Las Vegas, NV
Las Vegas Real Estate Broker - www.urLVhome.com

Great pros & cons!  I have had bad inspections even with trustee sale flips that have been rehabbed.  THey have the lipstick on the pig syndrome!

Apr 25, 2011 02:07 PM #10
Rainer
81,653
Iris Stuart
none - Santa Rosa, CA

Andi, thank you for your follow up to Donne Knudson's informative post.  You have to search hard to find an accurate picture of dealing with Homepath homes.  After reading your post I have a better idea of the perils associated with HP properties.  I appreciate the education!!

Oct 24, 2011 02:15 PM #11
Rainmaker
335,153
Inna Ivchenko
Mannis Real Estate Group - Calabasas, CA
Los Angeles / Valley Homes

I've seen most of Fannie properties in my area, most of them fixed, some of them are true nightmares. All of them overpriced regardless condition. Yet, now they became  very popular among first time buyers and inventors.

I totally agree about paperwork: I must return everything ( I rewrote my last homepath package 5 times, no kidding!) immediately 'otherwise AM will cancel it'', but it takes forever to get anything from them.

Feb 08, 2013 09:32 PM #12
Anonymous
Anonymous
Mickey

I have a buyer whose offer was chosen to go under contract on a Fannie Mae home.  I received the purchase addendum for the buyer to sign. I got the purchase addendum back from my buyer to forward to the listing agent and she added another buyer to the purchase addendum and had them sign it too.  She added her father's name.

My question is can you add another buyer to the purchase addendum prior to Fannie Mae executing the purchase addendum and opening up escrow?

Mar 30, 2013 09:08 AM #13
Rainmaker
209,779
Andi Grant
310-508-4354 | FirstTimeHomeBuyerRealEstate.com - Long Beach, CA
First Time Home Buyers Los Angeles, Long Beach
Hi Mickey, it's not a fully executed accepted contract yet because their purchase addendum is still technically a counter-offer to your offer as their addendum has different terms than what you sent, no? With that said, I don't see why not.

However, you will have to send the father's FICOs as well with a NEW more recently dated pre-approval that shows his name included in lender's pre-approval since it's still is in countering stage. If it makes your client even more qualified to buy the home and close the deal I don't see why it would be a problem unless it's a multiple offer situation in which they will have already chosen another offer prior to yours.
Mar 30, 2013 09:35 AM #14
Anonymous
Anonymous
Inhisword2

I attempted to cash purchase a fannie mae home. What a nightmare! Never again will I shop on their homepath site for a decent home. They gave me a counter offer on 7.25.14 that they wished to close 7.30.14 and wanted me to pay closing cost...I reluctantly agreed because my buyer's agent accepted the offer prior to consulting me for a counter to their counter offer. I packed up my belongings and headed to the new state to close on my purchase. I wired the purchase monies as well as earnest money (10%) of cash offer to their closing attorney. The day of close, they inform me that they have not done the title search yet! Seems that if I were willing to accept a dirty title they would have closed that day. But I went to the close expecting clear title and the keys to the house. They asked for a 10 day extension to perform their title work. Needless to say they failed to be able to secure a clear title and sent me a notice of termination of contract. Honestly, I am out alot of money due to the unethical business practices of all those involved. Now I am working on recovering my funds sent to their "trust" account. It is doubtful that any other expenses will be recovered without proper representation. For me, an expensive lesson learned. I agree with the blogger on this site---beware! Many con artists and snakes affiliated with Fannie Mae purchases. Oh and get this...the property is no longer showing up as "under contract" but now as "coming soon"... Wow! Are they really going to try to sell this house that they do not own?

Aug 08, 2014 01:33 PM #16
Rainmaker
209,779
Andi Grant
310-508-4354 | FirstTimeHomeBuyerRealEstate.com - Long Beach, CA
First Time Home Buyers Los Angeles, Long Beach

Inhisword2 - Hi, I don't know where to start! 

First I needed some clarification, when you said "my buyer's agent accepted the offer prior to consulting me for a counter to their counter offer" the buyer's agent cannot accept an offer or counter offer for you without your signature or some type of power of attorney in place (and I'm not sure how this varies per state).  Are you saying the buyer's agent signed on your behalf and there is no paperwork nor electronic trail of having showed you or sent you the counter-offer for you to review prior to them signing? 

Second, when you say "they inform me that they have not done the title search yet!"   Who is they?  Escrow/Title company told  you that?  What did the buyers agent say?  Were they in attendance with you at signing?

The dirty title that you mentioned - are you saying Fannie Mae wasn't the rightful owners/sellers?  Fannie Mae sent you a "Notice of Termination of Contract" when they were not the rightful sellers to begin with?  You had a contract buyer to seller and unless I'm misunderstanding something (and that could very well be the case as I am not a practicing attorney),  based on your side of the story, it doesn't sound like they should be allowed to hold your money hostage.   


I think you should consult an attorney immedately to find out what your best course of action is.  What state was this in?  

Aug 08, 2014 03:15 PM #17
Anonymous
Anonymous
Inhisword2

Hi Andi,

Thank you for your reply. Honestly, I have become so accustom to the lack of replies to my concerns that your reply amazed me!

In answer to your first question. I was informed over the phone that Fannie Mae made a counter offer and she-buyer's agent- accepted it on my behalf electronically. I was under the impression that I was locked into this deal. It was unknown to me at that time that the contract had not been fully executed. My buyer's agent was not a good communicator.

Secondly, I went to the listing office for the close. My buyer's agent bailed on me. She had not had me sign a buyer's agency agreement and was in trouble for that...long story...I had to retroactively sign a contract with her.
"THEY" are specifically the closing attorneys that informed me that they had not begun the title search prior to closing day. Funny, the email sent out by the closing attorney on the Monday prior to the close date made no mention of the need for a title search. I was led to believe that they possessed clear title and this was how they could do such a rapid closing of only 2 business days.

Right... the dirty title means that Fannie Mae are not the rightful owners of the property. It seems that the closing attorneys were "working" on resolving the issue. And yes, the listing broker sent me a Notice of termination of contract for a property that they should not have attempted to sell in the first place. I still do not have an executed copy signed off by Fannie Mae of this so called Notice of termination of contract. Plus, the listing broker changed the listing to "coming soon" approx 16 hours prior to the extension deadline of my actual buyers contract.

I have complied with all of their demands regarding the return of my moneys. I have not recieved any emails nor calls from them as to when I will recieve my funds. I did do followup calls to the closing attorney office to confirm that they did receive the Notice of termination contract and wiring instructions from me. They told me that they are "getting ready" to take care of returning my money...but that Fannie Mae has not yet sent them the executed Notice of termination contract. They are aware that the actual buyers contract expired today and this should be enough to return my money.

I will be contacting the South Carolina Consumer Affairs office on Monday, should my money not be returned to my bank by then.
I will be naming names at that point. Their unethical and fraudulent business practices will be exposed as well. If you like, I can also expose the entities on your blog.

I did consult a local attorney who suggested that I make a good faith effort to have those holding my money hostage to return it in a timely fashion. If this doesnt work, I agree---I must obtain legal counsel in SC regarding this matter.

Again thank you so much Andi. It feels good to be heard!
I wish I had been represented by an agent like yourself.

Aug 08, 2014 05:15 PM #18
Rainmaker
209,779
Andi Grant
310-508-4354 | FirstTimeHomeBuyerRealEstate.com - Long Beach, CA
First Time Home Buyers Los Angeles, Long Beach

Your buyer's agent told you she accepted an offer on your behalf without going over the offer terms with you and getting your approval?   That alone has so many legal ramifications to it.  Did you get the buyer's broker involved?  You wouldn't be in this situation if the agent hadn't accepted an offer without your knowlege.  On top of that it turns out she wasn't really representing you because she hadn't had a buyers agreement in place that was fully executed?   Here in CA we do not necessarily have to have one (not to be confused with a agency disclosure agreement), but if that is the norm where you are...

If you like, I can post a blog about your situtation and see if it gets featured, which will generate input from agents across the country with different suggestions on how best to handle it?   Though you will need to be prepared for some who may have a completely different take on what your role should've/ could've been.

Aug 09, 2014 12:25 AM #19
Anonymous
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Rainmaker
209,779

Andi Grant

First Time Home Buyers Los Angeles, Long Beach
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