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.
- 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
What the pretty house revealed in inspections underneath her makeup (new carpet and paint).
- Section I termite findings - major infestation, costing a couple thousands dollars.
- Bad plumbing, heavy leaking and pools of water under the entire house, fungus on rotted beams - several thousands of dollars.
- 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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