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

Donne:

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

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.

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. 

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.

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.

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).

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.

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

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

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!  

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.

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.

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....

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.