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

By
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.

______

Photo courtesy of Creative Commons

Creative Commons License
This work is licensed under a Creative Commons Attribution 2.0 Generic License.

Posted by

Andi Grant Rea Estate aGent Realtor

ALL RIGHTS RESERVED ©

____________________________________________

Affordable Homes, Affordable Payments, Quality Living  

 www.FirstTimeHomeBuyerRealEstate.com

               Prudential 24 Hour Real Estate Direct: (310) 508-4354 ~ Alternative (562) 726-ANDI  ~ Fax (562) 861-0285  Emailandi@andigrant.com    DRE # 01728424  

Search MLS for LA County Homes First Time Home buyer program New Listings Photo

Subscribe to Andi's Blog

close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Spam prevention

Accessibility option: listen to a question and answer it!

To submit the form,
drag the truck to the circle on the side.

Type below the answer to what you hear. Numbers or words, lowercase:

Topic:
ActiveRain Community
Groups:
Active Rain Newbies
Be The Best In Your Field
Diary of a Realtor
LA Connection
REALTOR LIFE
Tags:
fannie mae homepath
con artists
buyer beware

Comments 14 New Comment

Anonymous
Post a Comment
Spam prevention

Accessibility option: listen to a question and answer it!

To submit the form,
drag the clip to the circle on the side.

Type below the answer to what you hear. Numbers or words, lowercase:

Show All Comments
Rainmaker
153,934
Simone Bercu
Montgomery Co, MD Real Estate - GRI, e-PRO, AB
Keller Williams Capital Properties

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.

 

April 13, 2011 09:00 PM
Rainmaker
208,442
Andi Grant
First Time Home Buyers Los Angeles, Long Beach
310-508-4354 | FirstTimeHomeBuyerRealEstate.com

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.

April 13, 2011 09:08 PM
Rainmaker
598,830
Donne Knudsen
CalState Realty Services
Los Angeles & Ventura Counties in CA

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.

April 13, 2011 11:48 PM
Ambassador
582,533
Mona Gersky
GRI,IMSD-Taking the mystery out of real estate.
MoonDancer Realty, Dillsboro,NC

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!

April 14, 2011 12:08 AM
Rainmaker
208,442
Andi Grant
First Time Home Buyers Los Angeles, Long Beach
310-508-4354 | FirstTimeHomeBuyerRealEstate.com

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.

April 14, 2011 12:53 PM
Rainmaker
208,442
Andi Grant
First Time Home Buyers Los Angeles, Long Beach
310-508-4354 | FirstTimeHomeBuyerRealEstate.com

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

April 14, 2011 12:52 PM
Rainmaker
1,248,861
Carla Muss-Jacobs, Principal Broker/Owner
Buyer Focused ~ Buyer Results
BuyersAgentPortland.com | (503) 810-7192 Portland Metro Exclusive Buyers Agent | 100% Buyer Representation ~ 100% of the Time

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. 

April 14, 2011 08:57 PM
Rainmaker
208,442
Andi Grant
First Time Home Buyers Los Angeles, Long Beach
310-508-4354 | FirstTimeHomeBuyerRealEstate.com

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

April 15, 2011 01:44 PM
Ambassador
407,830
Tammy Emineth
Content Marketer, SEO Teacher, Website Fixer
Personal SEO - Website SEO and Real Estate Marketing

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! :)

April 15, 2011 09:17 PM
Ambassador
1,470,983
Renée Burrows
Las Vegas Real Estate Broker - www.urLVhome.com
Savvy Home Strategies Realty, LLC-REALTOR®-Estate-Probate

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!

April 25, 2011 02:07 PM
Rainer
81,653
Iris Stuart
none

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!!

October 24, 2011 02:15 PM
Rainmaker
304,245
Inna Ivchenko
Los Angeles / Valley Homes
Mannis Real Estate Group

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.

February 08, 2013 09:32 PM
Anonymous #13
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?

March 30, 2013 09:08 AM
Rainmaker
208,442
Andi Grant
First Time Home Buyers Los Angeles, Long Beach
310-508-4354 | FirstTimeHomeBuyerRealEstate.com
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.
March 30, 2013 09:35 AM
Anonymous
Post a Comment
Spam prevention

Accessibility option: listen to a question and answer it!

To submit the form,
drag the car to the circle on the side.

Type below the answer to what you hear. Numbers or words, lowercase:

Show All Comments
Rainmaker
208,442

Andi Grant

First Time Home Buyers Los Angeles, Long Beach
Do I Qualify as a First Time Home Buyer?
*
*
*
Spam prevention

Accessibility option: listen to a question and answer it!

To submit the form,
drag the lock to the circle on the side.

Type below the answer to what you hear. Numbers or words, lowercase:

Additional Information