Fannie Mae HomePath Financing

HomePath is a special designation given by Fannie Mae to properties in their portfolio that have been foreclosed on. Fannie claims their goal is to sell these properties in a timely manner in order to minimize the impact on the community. Houses labeled with a HomePath tag become eligible for special financing.

HomePath properties for sale – click here

+ Important Facts

- Fannie Mae will not accept contingent contracts on the sale of your home.

- You must use a Realtor® to purchase a HomePath property.

- You can choose your own title company

- Fannie Mae sells properties “as is”.

- Properties listed for sale include single family homes, townhouses and condos.

+ Financing

- 3% down payment on owner occupied properties

- NO mortgage insurance.

- Available for owner occupied and investment properties

- NO Appraisal – Fannie uses the sales price as it’s valuation.

- Eligible for HomePath Renovation Financing

Loan limits up to $729,750 depending on property location for single family homes. Four unit loans available up to $1,403,400 in high cost areas. Minimum credit score is 600 although many investors will not approve loans at this score. Borrower must have 5% of their funds towards the purchase. Seller may offer up to 9% help on CLTV’s less than 75%.

***I have closed these loans in less than 10 days. Understanding the guidelines is key.

Whether you are a first time home buyer or an seasoned investor, I recommend to work with experienced HomePath lending specialist and Realtors® who understand the guidelines and can fully explain your options.

“This may be the best time in the history of the world to purchase a home” – LP

Find out more about Fannie Mae HomePath financing – click here

-

Homes in the coastal counties around the Gulf are the ones that will see the greatest decrease in property values this year and in the immediate future, according to CoreLogic, a real estate research firm. The company is confident that at least $648 million in home values is sure to be lost this year on homes that were already affected by the spill.

But with oil still travelling across the Gulf, additional damage could create $3 billion in losses over the next five years. In the unlikely event that oil finds its way around the Florida Keys and up the Atlantic coast, homes in prime real estate locations like Miami and Key West could lose as much as $13.5 billion. That worst-case scenario would pin the total loss figure at $28 billion over five years, said the company.

In the wake of the oil spill, many local and national mortgage lenders extended foreclosure moratorium periods and offered modification help to homeowners who experienced property damage.

You gear up to apply for a mortgage, you call your mortgage advisor, fill out an application, and WHAM, you get hit with an unexpected documentation-fest. 

You thought you had all of your ducks in a row. 

“It can’t be this complicated, can it?” you think.

“But I didn’t have to document this much stuff last time I got a mortgage.” you tell your advisor.  “Why now?  I have great credit, 20% down payment, a stable job, what’s the problem?”

Welcome to 2010.  The world of banking is completely different now than even 2 or 3 years ago. 

Every day I have someone tell me that they are frustrated because they have to document everything in so much detail.  Most express the fact that last time they got a mortgage, there wasn’t nearly so much involved.

Simply put, the reason for this is that banks are paranoid.  Banks are very cautious and conservative on extending credit because of the rash of foreclosures over the past couple years, partially due to shaky underwriting practices in the past.  Gone are the days where showing up in a mortgage office was enough to get a mortgage. 

Banks have tightened up underwriting requirements in an effort to curb the number of bad mortgages that they write and improve their portfolios.  Add an increase in government regulations and the result has been a significant increase in documentation requirements over the past couple years.

Here are some things to prepare for that you may not have had to deal with a few years ago:

Appraisals

The appraisal process has been complicated by the introduction of the Home Valuation Code of Conduct (HVCC) in 2009.  In an effort to curb appraisal fraud, HVCC put safeguards in place that prevent mortgage companies from talking directly to the appraiser.  In addition, there is now a rule in place that prevents an appraisal from being ordered until 4 business days after you have been sent loan disclosures by the lender.  The net result:  higher appraisal fees and longer turn around times.

Assets

Believe it or not, you now must document your assets to obtain a mortgage.  This includes money necessary to close for down payment and closing costs as well as “reserves” or excess money in the bank after closing.  Any unusual deposits over the past 60 days must be “sourced” which means showing where the money came from and that it was yours originally. 

In addition, some lenders have recently been requiring proof of the terms of withdrawal from any asset account even if you aren’t drawing on the account for closing.  This requirement seems ludicrous if you are not tapping into the funds for closing, but lenders want to be sure you will not be hit with a large penalty or high interest loan if you do have to draw on the account in the future for an emergency.

Employment

If you have been employed in the same line of work for less than two years, it will be extremely difficult to obtain a mortgage.  The exception is an FHA mortgage which allows for recent graduates or someone re-entering the work force after maternity for example, to get around the 2 year requirement. 

Self-employed individuals will also have a more difficult time as two years self-employed is mandatory for virtually every program.  You must prove two years self-employment through articles of incorporation, articles of organization, or business license.

Credit

Be ready to provide a “credit inquiry” letter which will explain every credit pull you have had over the past 90 days.  Lenders want to make sure there are no debts you have that are not appearing on your credit.  In addition, depending on the frequency and age of any derogatory items, you will potentially have to provide a “letter of explanation” explaining each derogatory item. 

Credit scores of 620 and above are mandatory to qualify for any program (there are a few lenders who claim they can help people with scores below 620, but in practice, it is virtually impossible to get a transaction approved with a score that low).  You will pay a higher rate with scores in the 600’s, and lenders will scrutinize your credit, especially if you are in the 620-639 range.

Income

Income has been the area that has been hit the hardest with stricter requirements over the past few years. 

“Stated” income financing has disappeared, and all borrowers must now document all income.  This means that the self-employed borrower who writes off all of their income can’t qualify.  Depreciation expense for self-employed filers can be added back to income for qualifying, but that usually isn’t enough to offset a zero or low adjusted gross income.  This is very frustrating for most self-employed people I talk to.  Even if they have become aware of these changes and started to write off less of their expenses in order to boost their income on paper, the lender will take a 2 year average of any self-employed income, and will use that for qualifying.

Another area that has changed with most lenders is the ability to use rental income to qualify.  For one, you must claim the rental income on Schedule E of your tax returns in order to use it.  If you haven’t, then you likely will not be able to use the income.  Lenders no longer will accept rental leases as proof of rent collected. 

Conclusion

Although recent guideline changes have made qualifying for a mortgage more difficult, and the paperwork required more challenging, it is possible to obtain a mortgage.  In fact, we have seen quite a few loan approvals come through with very minor or no loan conditions (items required by the lender in addition to the items submitted with the original loan package).  The key is documenting everything properly up front.

The National Association of Real Estate Brokers and PartnerFirst announced that they will form a network of certified multicultural short sale agents that will extend nationally with the aim of helping minority homeowners avoid foreclosure. NAREB is a trade organization for certified minority real estate professionals, while PartnerFirst offers agent training and certification for mortgage providers and professional groups. Their Minority Outreach Initiative will provide educational tools and financial support through mortgage providers and government agencies that are culturally diverse and inclusive.

"We are honored to get the support of NAREB in our efforts to provide communities with educational programs that are culturally sensitive, empowering homeowners to identify and pursue the best possible outcome for their situations," said PartnerFirst COO Son Nguyen.

NAREB CEO Vincent Wimbish added that the partnership will offer members agents the opportunity to add an industry-recognized short sale certification to their credentials, which will assist the group’s members as they work to "restore and revitalize communities of color."

Recently, the Center for Responsible Lending found that Latino and African-American homeowners suffered more losses as the result of a foreclosure than any other racial demographic.

The number of homeowners in the state who entered foreclosure dropped in the second quarter to its lowest level in three years, reported financial forecasters with MDA DataQuick in San Diego. Foreclosure activity has fallen in California for five straight quarters, with April to June bringing 70,051 Notices of Default, a 13.6 percent decrease from the previous quarter. It was an encouraging sign for the state’s housing market, which registered a peak of 135,431 foreclosure notices during the first three months of 2009.

"Obviously, motivated sellers and accommodating lenders have played a part in bringing the default filings down, especially when it comes to short sales," said DataQuick president John Walsh, adding that rising home prices could further lead to fewer homeowners finding themselves underwater.

Lower-priced markets saw the greatest overall decrease in foreclosure activity, although these were still the areas with the highest concentration of defaults per 1,000 homes, according to researchers.

Lenders and government officials in the state have worked to help distressed borrowers. California residents have been some of the hardest-hit by the foreclosure crisis.

As a result, the volume of existing-home sales slowed slightly in June, dropping 5.1 percent from the previous month, reported the National Association of Realtors. Even so, existing-home sales were 9.8 percent higher last month than they were in June 2009. Buyers responded to the federal homebuyer tax credit with enthusiasm, but many have been delayed in closing on their deal because of slow banking practices, such as short sales and appraisals. As a result, many of June’s existing-home sales will be held over into the next two months, said the NAR.

The credit did provide a short-lived boost to the housing market, but real relief has yet to arrive. "Broadly speaking, sales closed after the homebuyer tax credit will be significantly lower compared to the credit-induced spring surge. Only when jobs are created at a sufficient pace will home sales return to sustainable healthy levels," said NAR chief economist Lawrence Yun.

Last month, Congress passed legislation that extended the deadline to close on a home sale and still receive tax benefits from June 30 to September 30, reported the NAR.

Noting the sharp decline in new home contracts after the credit’s deadline expired April 30, RE/MAX reported that home sales were still 5.6 percent higher in June from a year ago. Home prices were also 3.5 percent higher last month than they were in June 2009. The real estate company’s monthly survey reported improved year-over-year activity in 54 metropolitan areas.

RE/MAX CEO Margaret Kelly said that there was no questioning the tax credit’s impact on the market. "No one can predict the future, and we may still see a slight pull back, but for right now it appears that housing is holding its own, hopefully on the road to a sustainable recovery."

The Northeast experienced the greatest year-over-year growth, with sales in Boston and Hartford up 23 percent from June 2009 and Philadelphia enjoying a 27 percent boost. Home prices inched higher, and homes remained on the market for a shorter average period of time.

Home sales initially dropped 30 percent in May from the previous month, reported the National Association of Realtors.

That’s because in some instances, lenders might low-ball a borrower by offering a lower rate now and then dragging out how long it takes to lock in that rate. The longer the borrower must wait, the higher the risk that their previous quote will expire. They could then get hit with a higher rate, warned Inman News.

In most cases, a reliable lender will lock in a rate relativity quickly, as long as they’re confident that they’re dealing with a qualified borrower. Banks only delay locking a rate if they think there’s a chance the borrower won’t qualify for a loan. Some delay as a strategic way of later inflating the mortgage rate, said Inman.

If a borrower can’t get a same-day lock, they can protect themselves against getting low-balled if they keep track of the most updated loan prices on the lender’s website. Otherwise, they can ask their loan officer for copies of the most recent loan price.

Homebuying and refinancing become particularly affordable when mortgage rates are near record-lows, as they are now.

The latest report from real estate analysts at RealtyTrac showed just over 1.9 million filings on about 1.65 million properties in the first half of 2010. Foreclosures did decrease as the year wore on, with the second quarter of 2010 producing 4 percent fewer notices from the first three months. Those figures slipped further in June, with 313,841 properties seeing some type of notice, a 3 percent decrease from the previous month. Still, the country is on pace to exceed 3 million foreclosures on the year, said the report.

"The second quarter was a tale of two trends," said RealtyTrac CEO James Saccacio. He explained that lenders slowed the rate of new foreclosures by offering aggressive loan modification programs, buying extra time to hasten the foreclosure process on backlogged homes.

Already hit hard by the housing slump, the Detroit metro area established a new regional record in the first half of 2010 with 47,563 foreclosures, up 35 percent from the first six months of 2009, reported the Detroit News.

That was reflected in the latest survey from the Mortgage Bankers Association, which showed that purchase applications decreased another 3.1 percent for the week ending July 9. Those applications have fallen nine of the past 10 weeks and are now at their lowest levels since December 1996. New homebuying makes up a small portion of total mortgage activity – less than 25 percent of all applications were on purchases, said the report.

Home sales declined by 30 percent in May following the April 30 expiration of the tax credit’s signing deadline, reported the National Association of Realtors. That stagnation seems to have carried into June.

The news isn’t all negative for homebuyers. Gains in job growth could indicate the economy’s imminent rebound. More people were hired at a new job than were fired in June, reported Consumer Reports. Additionally, the Bureau of Labor Statistics reported a drop in the unemployment rate for June, down to 9.5 percent.