Shame on you for Putting a borrower in a FHA Loan on a Homepath Listing

By
Mortgage and Lending with Commercial Capital Funding

The Fannie Mae HomePath Mortgage Program.

 Many homebuyers are currently trying to take advantage of the numerous bank owned (REO) properties that are currently for sale.  Although there are many financing options available, some are better and tailored specifically to meet the needs of these REO's.  One such loan program is known as the Fannie Mae HomePath® Mortgage. 

 Fannie Mae created a custom loan program specifically for Fannie Mae HomePath® Properties.  This financing is only available for foreclosed properties owned by Fannie Mae that have been designated as HomePath® properties.  The complete list can be found at www.HomePath.com.  Fannie Mae lists these properties with local REO agents that typically have experience in selling foreclosed homes. 

 There are numerous benefits to using HomePath® Mortgage financing over your traditional loan programs when purchasing a HomePath® Mortgage.  The benefits of the program are blogged all over this website so I won't get into the specifics, but it's important to note that an average HomePath® loan should fund in about 21 days (assuming the borrower is providing the conditions in a timely manner), try getting that done with an FHA loan! What I want to talk about is improper qualifying for HomePath® listed Properties.   

I wanted to clarify the confusion I am seeing surrounding HomePath® financing versus FHA. I have seen time and time again FHA offers being put in on HomePath® listings and typically at the recommendation of banks or the mortgage loan officers. The dirty little secret is the bank or loan officer typically benefits more than the buyer or they are simply unable to offer HomePath® financing.

 Let's run the numbers.

 John Homebuyer is purchasing a HomePath® property for $200,000 and wanting to put 5% down.

 FHA

Rate 4.625% (average premium being paid to the originator at this rate is 2.00%)

30 Year Amortization

FHA Upfront MIP 2.25% (yes, FHA requires upfront mortgage insurance)

Annual Premium .50% or $79.19 per month added to your monthly P&I payment

 Total payment with FHA loan & Monthly MIP payment $1,056.06

HomePath® loan

Rate 5.00% (Par to Broker)

30 Year Amortization

No MIP

No Annual Premium

Total payment with HomePath® financing $1019.96

 Now let's talk collateral.  It is a well known fact that foreclosed properties are rarely well maintained and often times are in need of a little TLC, or at least some fixtures or appliances.  Fannie Mae HomePath® Mortgage DOES NOT REQUIRE AN APPRAISAL!! FHA has strict guidelines on the condition of the property and also additional underwriting guidelines that HomePath® Mortgage does not. FHA loans will require an appraisal to be done which is an additional cost to the borrower (an average of $425).

 Real Estate Agents, when working with you clients, make sure their loan is the best loan for the property they are purchasing!  A HomePath® listing should always be financed with a HomePath® Mortgage. Ask the broker or bank why the borrower is being qualified for an FHA loan and not HomePath.

 

Comments (6)

Renée Donohue~Home Photography
Savvy Home Pix - Allegan, MI
Western Michigan Real Estate Photographer

This seems to be a great program!  I have never once had anyone take Fannie Mae up on this.  Do they allow for financing on condos in blighted areas or do they still order a condo cert?

Jul 16, 2010 06:13 AM
Cynthia Larsen
Cotati, CA
Independent Broker In Sonoma County, CA

I have a buyer that is qualified for a FHA loan. We stumbled on a homepath qualified home, we read up on it and we were AMAZED on how much she could save. Unfortunately she didn't like the house so we didn't make an offer. But yes, we would have chosen the homepath option, there is no reason to stick with what you started with if there is something so much better that comes along. The client should always be put first.

Jul 16, 2010 06:25 AM
Andrew Martinez
Commercial Capital Funding - Citrus Heights, CA
Fannie Mae Homepath Mortgage

Renee,

If it's a Fannie Mae listed property it doesn't matter the type of property, location or condition. You can check www.homepath.com to see if it's a HomePath listed property. It has to be HomePath listed to be HomePath financing eligible. I have a couple of condos we are working on right now.

One is located in Oceanside San Diego and was originally qualify and approved FHA before being eventually turned down for FHA financing because too many units were owned by one individual and with HomePath ownership percentage isn't an issue.

Also a second Condo that is signing today at 12 in Lake Elsinore CA was turned down FHA after the appraisal was ordered and it was reveled the delinquency factor was too high in the complex. The loan is now in the loan program it was supposed to be in and signing.

If you see an FHA offer on a HomePath listed property ask why isn't this being done with a HomePath loan. I have my opinions which I believe is greed since the premiums in FHA loans are much better or the lender doesn't offer HomePath.   

Jul 16, 2010 06:46 AM
Andrew Martinez
Commercial Capital Funding - Citrus Heights, CA
Fannie Mae Homepath Mortgage

Cynthia,

The FHA loan program is a great loan program but doesn't belong on a HomePath Property. Our business is built around real-estate agents and have seen borrowers put in the wrong loan program and after several weeks of being told their loan is approved to ultimately have it turned down the and the agents are left thinking now what!!!! . I am glad to hear your looking at the financing options and advising your clients on the right decisions. :)

Jul 16, 2010 06:53 AM
Bob Willis
Berkshire Hathaway HomeServices California Properties - Orange, CA
Orange County & L.A. County Real Estate Agent

Thank you for the update.  I had forgotten that Homepath doesn't require an appraisal.  I have started to see more Homepath properties for sale in my area over the past couple of months.

Jul 16, 2010 08:39 AM
Jim Paulson
Progressive Realty (Boise Idaho) www.Progressive-Realty.info - Boise, ID
Owner,Broker

HomePath seems like a great option.  I am trying one for a client now with Renovation but those details are sketchy online.

 

Dec 28, 2010 08:29 AM