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

Mortgage and Lending 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

Posted by



 Donne Knudsen

Realtor® - CalState Realty Services

DRE#: 01364050 / NMLS#: 249822 




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


Re-Blogged 5 times:

Re-Blogged By Re-Blogged At
  1. Andi Grant 04/13/2011 09:03 AM
  2. Jane Peters 04/13/2011 02:18 PM
  3. Sidney Kutchuk - Realty Works Temecula Kutchuk - Realty Works Temecula 04/26/2011 04:51 PM
  4. Don Sabinske 10/20/2011 10:25 AM
  5. Charles Stallions Real Estate Services 12/30/2012 12:50 PM
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Lorraine or Loretta Kratz
Crescent Moon Realty, Inc. & Land N Sea Auctions. - San Marcos, CA
Certified Negotiation Consultants


I love using HomePath here in San Diego we submit all offer electronically and I have found this to be a blessing, also, if the home is over priced -- there seems to be swift price reductions, and they sell quickly in San Diego. Something else, about the submission of offer on a electronic basis--there is no issues with agent not submitting offers or agents being difficult to find to get an offer submitted and last response time is awesome.

HomePath also does a nice job of rehabbing the properties here, much better than HUD. The key is to find a lender that is capable of working with a HomePath property, many are designated on there website. Congratulations

Apr 13, 2011 05:53 PM #21
Donne Knudsen
Los Angeles & Ventura Counties in CA - Simi Valley, CA
CalState Realty Services

Phil - I'm glad that my post will be helpful to you and your clients.

Ken - I too prefer the FHA 203k loan for properties that are fixers over the HomePath program.  As for all of the incentives, I agree that all of these "benefits" do not come free.

Cheryl - I'm glad I could provide some helpful info.

Ed - I too think that HP properties are just systematically overpriced because they don't require an appraisal to support it.

Lorraine & Loretta - I'm glad to hear that the HP program is working well for you.  As for HP rehabbing their homes, I haven't seen a lot of that here in Los Angeles & Ventura counties.  Lastly, my issues with the HP program is not with my lending sources, quite the contrary.  My HP lending sources are incredible.  My issues with the HP program are with the condition of so many HP properties around here and the way that this program is primarily geared to help Fannie Mae get rid of their sub-par REO's.

Thx for stopping by everyone; I really appreciate it.  Have a good night everyone.  :)


Apr 13, 2011 06:21 PM #22
Brent Alan McDonald
First Choice Loan Services - Scottsdale, AZ
Home of the Smooth mortgage experience

I've only found Homepath to be useful for Non-warrantable condos.


FHA you need a 620, no reserves, none of your own money.  HomePath you need at least a 680, reserves and your own loot.


Although Homepath has NO MI, the rate is higher and it will stay that way the life of the loan.  Comparatively the Mortgage Insurance will eventually go away on a FHA loan.

Apr 13, 2011 06:27 PM #23
Constina M. Baylor
REMAX Gold Coast Realtors Oxnard - Oxnard, CA
Broker Associate - Oxnard Homes, Oxnard Beach and Marina

Hi Donne...You are a wealth of information.  I've heard about the Home Path program but I was clueless.  I'm certainly not any more. 

Apr 14, 2011 05:12 AM #24
Rob Spinosa
Guaranteed Rate, Marin County, CA - San Anselmo, CA
Vice President of Mortgage Lending, Marin County

As has been mentioned here a number of times, it's not really a good comparison to measure a Homepath loan against FHA or conventional if you know that the property would rule out either of the latter options.  The housing market is what it is in many areas.  If Homepath allows a purchase that wouldn't otherwise happen, and the buyer is OK with risks (assuming he/she understands the risks in the first place) HP is one of the few good things to come out of the GSE's in a long while.

I would just add that higher rates are really not a huge detriment both relatively speaking and when there is no other financing.  Nobody should be crying in a historic perspective over a 30-year rate in the 5's or 6's....

Again, HP isn't perfect but what about this housing economy is?  It's a small step in the right direction and for that alone we should embrace it.

Apr 14, 2011 11:21 AM #25
Donne Knudsen
Los Angeles & Ventura Counties in CA - Simi Valley, CA
CalState Realty Services

Brent - I've agreed about the condos but I've even had issues there too.  Just recently, one of my borrowers wanted to purchase a local condo and after speaking to the HP listing agent, my first thought was, "WTH were they thinking"? 

More than 50% of the complex was in default, there were no reserves and no HOA because they had recently disbanded and no property mgt co.  Oh and there was some sort of litigation.  This unit is not eligible for any kind of financing, even HP financing.  The only way to sell that property was to an all-cash buyer.

Constina - So many people don't really know all the pros and cons of the program.  So often, all they hear are the benefits.

Rob - In theory, I do agree that this program looks like a great way to get rid of some of the run-down, dilapidated, dumps on the market.  I have even tried (numerous times) to embrace this program in assisting my borrowers with a mortgage loan that they can afford.  

However, most of the HP around here are not appropriate properties for most of my borrowers.  Most of these properties need serious rehabbing and most of my borrowers are not getting rehab loans.  For people who are interested in purchasing an HP property, I would much rather see them using an FHA 203k loan. 

Between the HP program and a 203k loan, the rates are practically equivalent but with the 203k loan, the borrower would get the funds to do the work to make the property habitable.  While HP has a rehab loan too, it is even more expensive than the standard HP loan and thus not as affordable as a 203k loan.

Thx for stopping by everyone; I really appreciate it.  Have a good night everyone.  :) 

Apr 14, 2011 03:31 PM #26
Christine Donovan
Donovan Blatt Realty - Costa Mesa, CA
Broker/Attorney 714-319-9751 DRE01267479 - Costa M

Donne - There are definitely a lot of pros and cons to consider when buying a  Home Path home, and you've done a nice job of outlining them.

Apr 14, 2011 03:52 PM #27
Donne Knudsen
Los Angeles & Ventura Counties in CA - Simi Valley, CA
CalState Realty Services

Christine - I'm glad you like the post.  While I am not totally against this program, I don't necessarily like it when others will sing the praises of this program without also discussing the things to watch out for.  Thx for stopping by; I really appreciate it.  Have a good day Christine and a wonderful weekend.

Apr 15, 2011 09:24 AM #28
Michael Jacobs
Coldwell Banker Residential Brokerage - Pasadena, CA
Los Angeles Pasadena Area Real Estate 818.516.4393

Donne -- first, congratulations on the feature.   This is a very in-depth explanation but I have a couple of questions:

---is it true with HomePath financing, the seller will not pay for any transfer fees(city/county) and these fees need to be included as a closing cost adjustment requested of the seller?

---is it true an investor can purchase a HP property using HomePath financing with 10% down?

Thanks for the great information(as always).

Apr 16, 2011 05:38 AM #29
Carla Muss-Jacobs, RETIRED
RETIRED / State License is Inactive - Portland, OR

Unfortunately, I had clients who attempted to purchase a Fannie Mae property with HomePath financing.  The siding was bad . . . failed . . . needed to be entirely replaced.  NO problemo, through HomePath . . . no appraisers, and they (Fannie Mae) will fund the loan . . . on bad siding!  Scary.

Apr 18, 2011 04:36 AM #30
Donne Knudsen
Los Angeles & Ventura Counties in CA - Simi Valley, CA
CalState Realty Services

Michael - I'm glad that you liked it.  As for the transfer fees, I can't remember if my borrowers paid them or not.  Good question; I'll have to check my file to refresh my memory on whether they did or not.  Yes, on the investor question.  This is why I think HP is a much better program for investors than for first time buyers.  Investors can get in for less than a conventional loan and get a comparable rate as a conventional investor program.

Carla - Personally, I think the whole reason fannie devised the HP program was to get rid of all their dumpy REO's that they didn't want to have to fix up.  So many of these properties go so far beyond scary.  Some should actually be torn down.

Thx for stopping by folks; I really appreciate it.  Have a good night and a great week too.  :)

Apr 18, 2011 07:02 PM #31
Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
Buy Daytona condos for heavenly good prices

Thanks for the information. I see it often on REO properties, and it is very important to understand how it works.

Apr 26, 2011 04:57 PM #32
Donne Knudsen
Los Angeles & Ventura Counties in CA - Simi Valley, CA
CalState Realty Services

Jon - It's true that so many people do not understand how this program works.  While there are definite pros and cons to the program, for some buyers this can be another mortgage option, which is absolutely vital in some markets.  Thx for stopping by Jon; I appreciate it.  Have a good day and a great week too.  :)

Apr 27, 2011 09:20 AM #33
Jan Green
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

Great information Donne!  As usual, you've spelled out all the details.  Anyone reading this will pick up a tip or two.  Thanks!

Oct 20, 2011 10:29 AM #34
Iris Stuart
none - Santa Rosa, CA

A very welcomed post Donne!  I'm viewing a Homepath condo with my client who is a first time buyer this afternoon so am doing some research ahead of time and found your post.  This is by far one of the most detailed pro/con discussions I've found.  I've learned a lot and have a better idea of the dangers.  I've viewed several Homepath homes here in Orange County, CA and have found most of them to be in poor condition - or a generous amount of lipstick has been applied.  Thank you!  

Oct 24, 2011 07:11 AM #35
Donne Knudsen
Los Angeles & Ventura Counties in CA - Simi Valley, CA
CalState Realty Services

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!  :)

Oct 25, 2011 05:42 PM #36
Charles Stallions Real Estate Services
Charles Stallions Real Estate Services Inc - Gulf Breeze, FL
Buyers Agent 800-309-3414 Pace and Gulf Breeze,Fl.

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.

Jan 01, 2013 03:35 AM #37
Inna Ivchenko
Barcode Properties - Encino, CA
Realtor® • Green • GRI • HAFA • PSC Los Angeles CA

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.

Feb 08, 2013 01:57 PM #38
Inna Ivchenko
Barcode Properties - Encino, CA
Realtor® • Green • GRI • HAFA • PSC Los Angeles CA

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....

Feb 08, 2013 02:07 PM #39
Ken Barker Realtor® GRI, E-Pro Certified
Dilbeck Real Estate - Burbank, CA

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. 

Feb 09, 2013 03:24 AM #40
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