SAN FERNADO VALLEY CONDOS - Eligible for Fannie Mae HomePath Program

By
Mortgage and Lending with Los Angeles & Ventura Counties in CA

 

REAL ESTATE RECOVERY - San Fernando Valley (Los Angeles County) 

While the condo market in Los Angeles County is still considered a distressed market, buyers in the valley can still purchase great condos with only 3% down and a 3.5% credit for closing costs.

 

One of the hardest hit markets in Los Angeles & Ventura counties is the condo market.  Nowadays, condo financing is extremely challenging because so many condo complexes are simply not eligible for any kind of financing, - PERIOD!!!    For buyers in the lower end of the market here, buying a condo is nearly impossible.

As a result, many condo sales are strictly all-cash investors looking for rental income, which makes any future financed sales even more remote and less likely than ever before.  The biggest issue with getting condo financing is that a) the owner occupancy rates are too low, b) the HOA has little to no cash reserves and is operating at a loss and c) there is pending litigation on the complex or the HOA.  All of which are issues that are dealbreakers for most lenders.

Right now, Fannie Mae REO's, which are called HomePath (HP) properties, are properties that were foreclosed by a lender where Fannie Mae was the investor. 

Because Fannie Mae holds these liens, they can revise their own conventional guidelines in order to move these properties out of their inventory.  As a result, there are some great benefits to purchasing one of these properties.

The HP condo guidelines aren't as stringent as most other loan programs (there are still some basic condo requirements) and HP properties do not require HOA certifications so these type of issues don't have to derail the transaction.  The HP loan program also doesn't require monthly mortgage insurance (MI) or an appraisal.  The benefits of no appraisal or MI can eliminate some of the biggest challenges that can come up in an escrow transaction.  With hundreds of HP properties available here in Los Angeles & Ventura counties and dozens more coming up soon, these may be the only available condo that are eligible for any kind of financing.  

One of the best benefits is that HP only requires 3% down payment, which basically allows Fannie Mae to compete with FHA loan products. The HP down payment can also be from either the borrower's own funds or a gift from a relative.  Fannie Mae is currently offering buyers up to 3.5% in closing cost assistance on HomePath (HP) properties that close escrow on or before October 31, 2011.   

Here in Los Angeles & Ventura counties, there are literally hundreds of HP condos available that would be perfect for the first time buyer who wants to stop throwing their money away on rent and stop paying their landlords mortgage.  For eample, there are two units here in Tarzana in the San Fernando Valley is just blocks from Ventura Blvd. and all the shopping, restaurants and entertainment on the Blvd. 

 

 

Both of these units have nearly 1,000 sq. ft. of living space and one has been nicely rehabbed.  This gated community offers residents a pool & spa as well as a recreation room.

   

 

 

 

Right now, comparable rentals in this neighborhood are running approx. $1,500-$1,800 a month.  For less than $1,700 a month (PITI+HOA), you could own one of these homes.  For more info on the HP program and how you can qualify to purchase this home, contact me, Donne Knudsen of C2 Financial Corp, at 805.2069123 or donne4loans@earthlink.net

 

 

Today's real estate market and lending environment can be really scary, which is why it's important to get as much information as possible before starting your search. Finding out more about affordable home loan options and getting pre-approved is an absolute must.  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.

Posted by

 

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

 Donne Knudsen

Realtor® - CalState Realty Services

DRE#: 01364050 / NMLS#: 249822 

 

805.2069123

 

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

Comments (20)

Connie Goodrich
Keller Williams Realty - McKinney, TX
CRS ABR (McKinney Realtor)Texas

WOW for the financing for the condos - you are right, it is a tough cookie to get a loan through - owner occupied ratios, FHA approved, etc. make you go through a lot.  Excellent post!

Aug 16, 2011 03:04 PM
Donne Knudsen
Los Angeles & Ventura Counties in CA - Simi Valley, CA
CalState Realty Services

David - We're saturated down here in SoCA with HP properties.  For so long, I was leery of these properties because so many of them were run-down, dilapidated, dumps (and many still are).  These days, Fannie Mae is wisening up and making some desperately needed repairs on some to prepare them for sale, like one of the properties in my blog.

Connie - Around here, trying to get a condo complex approved for financing is a nightmare and quite honestly, not worth the time and energy because they are simply not eligible.  Fannie Mae has definitely found a way to get rid of some of their inventory.  Freddie Mac has a similar program called HomeSteps.  I'm closing one of those next week and while they are a little more challenging, there are some benefits to the buyer.

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

Aug 16, 2011 03:27 PM
Brian L. Sirota, Esq.
Bristar Realty (Realtor/Attorney) - Orange, CA
For Solutions: (714) 501-7660

Donne, you regularly put out great stuff.  Your description of HomePath is on the money!    Suggest!  Brian

.   

Aug 16, 2011 03:29 PM
Susan Neal
RE/MAX Gold, Fair Oaks - Fair Oaks, CA
Fair Oaks CA & Sacramento Area Real Estate Broker

Hi Donne - Home Path is a great program.  I had seen a Fannie listing that needed lots of work, then went back a month later to show to buyers and it had been completely fixed up:  repaired and painted!  My buyers fell in love with it and bought it with a Home Path loan.  Saved money and got a great deal.

Aug 16, 2011 04:23 PM
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi
NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 - New Lenox, IL
708.921.6331 - 40+ yrs experience

Donne:  You educate regarding condos ... and I say KUDOS to you!  I'm trying to get to as many agents in my area as possible about this timely topic.  There's SO many that don't understand the ins and outs of getting financing for condo properties.  HomePath provides another option to consider.  For someone considering the purchase of a condo, that's good news ...

Gene

Aug 16, 2011 04:47 PM
Michael Jacobs
Pasadena, CA
Los Angeles Pasadena 818.516.4393

Donne -- the condo market is, as a general rule, pretty difficult as you state.   I have yet to sell a HomePath condo using HP financing for my buyers so I have a couple of questions or issues that I wonder if you could clarify:

--Is it true investors can purchase with a 10% down payment?

--Is it true HomePath will not pay for city/county transfer tax fees, HOA transfer fees, NHD fees and a buyer should request these as part of closing costs?

--there seems to be some incentives for lower down payment buyers(at least on paper) -- how about all cash buyers and quick closings(both owner occupied and investor) --- would they qualify for the $$$ incentive I often see?

 

 

Aug 16, 2011 05:42 PM
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Donne, the biggest difficulty that I am running into here in Connecticut is that MOST of the Condo Complexes have not re-certified with FHA even though they have been told continuously for two years that they need to do that.  As a result the Condo Owners in those Condo Complexes that have not re-certified are missing out on about 2/3 to 3/4 of the Condo buyers here in Connecticut.

Aug 17, 2011 05:41 AM
Donne Knudsen
Los Angeles & Ventura Counties in CA - Simi Valley, CA
CalState Realty Services

Brian - Thx for compliment; I appreciate it.  For so long, I was not a big fan of the HP properties because all the HP properties that I came across were such run-down, dilapidated, dumps and the transactions were challenging because the buyers had very different expectations of these properties and transactions. 

Now though, there is definitely a place in my market here for these properties and transactions.  They are not for everyone and I make sure my borrowers understand the disadvantages of these properties and transactions and that they are fully aware of what to expect.

Susan - I too have recently started seeing some of that here in Los Angeles & Ventura counties, where Fannie is choosing to modestly rehab some of the more promising properties.  Some are still dumps but some are definitely move-in ready. 

I've also been a little impressed with the fact that Fannie and their listing agents really seem to be honoring the whole First Look incentive, where no investors can submit offers for the first 15 days.  This really gives my first timers a chance to get in there and make some really solid and aggressive offers.  These properties are not for the fence sitters, dawdlers or delusional.  Most of these properties go fast.

Gene - Around here, HP is the only way to go for so many condo complexes because so many of them are simply not eligible for traditional financing.  It's true to that so many prospective buyers and their Realtors/agent are just simply not familiar with them.

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

Aug 17, 2011 07:11 AM
Donne Knudsen
Los Angeles & Ventura Counties in CA - Simi Valley, CA
CalState Realty Services

Michael - Great questions and here are my answers:

Yes, investors can purchase with only 10% down but only after the First Look (15days) incentive has expired.  However, having said that, there are some serious price adjustments for investors only putting 10% for the no MI option (which means it gets costly with only 10% down)

Yes, Fannie has refused to pay these costs (on the ones I have done) and this is why I believe they offer the 3.5% closing cost credits.  So far, my borrowers have found it impossible to get more than the 3.5% closing cost credits.  I have had many borrowers ask for more to compensate for repairs and so far, every one of their requests have been denied.

Not sure about this last question.  As an MLO, I don't work with cash buyers so I have never had to ask this question.  Once again, only owner-occupied offers are accepted during the First Look incentive period.  If the property is still active on day 16, then investor offers will be considered.  Based on my experience, Fannie seems to be making some concerted efforts to get these properties in escrow asap, which means a lot of them are not active on day 16.

Hope this addresses any questions and/or concerns you may have about this program.  If not, please feel free to contact me.  I'd be happy to answer any other questions and/or address any other concerns.  :)

Aug 17, 2011 07:21 AM
Donne Knudsen
Los Angeles & Ventura Counties in CA - Simi Valley, CA
CalState Realty Services

George - That is probably one of the biggest issues with many of the condo complexes here too.  Many of my lending sources have also streamlined their HOA cert processes too but it's just getting the HOA's on board to be do what it takes and and the sellers on board to allow us (lenders/MLOs) the time to do it.

With those borrowers of mine who wish to purchase a condo, more times than not, the complex is not FHA or even Fannie approved.  I, of course, explain to my borrowers that this doesn't necessarily have to be a deal breaker and that I will talk to the HOA mgt company and see if they are agreeable to going through the approval process. 

After talking to the HOA mgt company, more times than not, the HOA is already aware that they are not in a position to get approved because they already know their occupancy rates are too low or their reserves are in the dumps or they are currently in litigation with one of more sellers/vendors/agencies etc.  It's a sad state around here for most condo owners and prospective buyers.

Michael - On another note, regarding your last question.  I believe the buyers agent would still get the selling bonus regardless if they were representing an all-cash investor or a financed owner occupied buyer. 

Thx for stopping by folks; I appreciate it.  Have a good day everyone.  :)

Aug 17, 2011 07:30 AM
Sidney Kutchuk - Realty Works Temecula Kutchuk - Realty Works Temecula
Realty Works Temecula - Temecula, CA
Realty Works Temecula

Hi Donne:  It can be confusing to buyers to determine which properties follow certain rules, very good explanation, sorting this out!

Aug 17, 2011 02:19 PM
Rodney Mason
Guaranteed Rate NMLS# 2611 - Atlanta, GA
VP of Mortgage Lending - AL, FL, GA, SC, & TN

If a condo is HomePath eligible, then that is the only way to go.  It makes the process so much easier.  I have one closing next week.

Aug 17, 2011 03:35 PM
Donne Knudsen
Los Angeles & Ventura Counties in CA - Simi Valley, CA
CalState Realty Services

Jane - Buying a home and getting a loan is as confusing and complicated nowadays as it ever has been before.  It's so important that buyers are working with someone who knows what they're doing and has the experience to assist buyers with all the various loan options.

Rodney - It's taken me some time to warm up to this program because so many of the properties were horrible properties and it was so challenging to educate buyers about the terms and conditions of this program.  However, Fannie is starting to clean up some of these properties and with the right buyer, this is a good program.  As you mentioned, for condo buyers, it is pretty much the only way to go these days.

Thx for stopping by folks; I appreciate.  Have a good night too.  :)

Aug 17, 2011 04:31 PM
Michael Jacobs
Pasadena, CA
Los Angeles Pasadena 818.516.4393

Hi Donne -- thanks for your response(s) --- you're a great source of valuable information.  

Aug 18, 2011 04:02 AM
Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Hi Donne, I was under the impression that Homepath Financing ended by the End of July Did they extend it or was that for Homepath Renovation??

Aug 18, 2011 12:11 PM
Donne Knudsen
Los Angeles & Ventura Counties in CA - Simi Valley, CA
CalState Realty Services

Michael - You're welcome!  Let me know if I can help in any other way.

Endre - YEP!!!  It's been extended (again).  I think this is the third time it's been extended (and probably won't be the last).

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

Aug 18, 2011 12:25 PM
Don Sabinske
Don Sabinske, Sabinske & Associates Inc. - Zimmerman, MN
Sabinske & Associates Inc.

Bookmarking this.  HomePath is a great way to get into homeownership.  Thanks.

Aug 26, 2011 02:46 PM
Donne Knudsen
Los Angeles & Ventura Counties in CA - Simi Valley, CA
CalState Realty Services

Don - I wasn't always a fan of this program but I've been slowly coming around because for condos here in my market, HP is pretty much the only game in town.  Thx for stopping by Don; I appreciate it.  Have a good weekend.

Aug 27, 2011 03:39 PM
Anonymous
lisa

But is the whole complex than eligible for HOMEPATH if one was? Owner of one condo out of only four and no owner occupants and getting them in without financing is an extreme catch 22!?

Jan 14, 2012 01:18 PM
#20