Q: A lot of current real-estate listings say the house qualifies for a HomePath Mortgage. What is a HomePath Mortgage?
A: They are for Fannie Mae-owned homes that banks have taken back. To sell them more quickly, they have developed the HomePath. The down payment is less, and the monthly payment is less because mortgage insurance isn't added on to it. It's always a repossession, and they are owner-occupied.
Q: How do people find these houses?
A: You can find the houses through the program at www.homepath.com. I'm not sure whether you can search with specific criteria on the Multiple Listing Service, but a lot of times agents will put it on a sign or on the listing. Some agents work primarily in foreclosures. If you look for those agents, you will find them. There are seven or eights agents who do just foreclosures, and Fannie Mae houses are listed by just a few agents.
Q: What's the appeal of HomePath Mortgages?
A: HomePath pays up to 3.5 percent in closing-cost assistance. There is no loan-processing fee, so that will save you a thousand dollars or so, and you don't need an appraisal. I just did one, and it was like a whirlwind. In general, they say it closes 67 percent faster than other sales. Typically, closings can take a couple months or longer and some short sales six or seven months. Their homes are found everywhere. In Medford alone, you can find a home on the low end for $78,000 and ones on Cloudcrest (Drive) for $344,000 and Park Ridge (Drive) for $354,900. You get a lot of people looking for foreclosures because they want a good deal. I've had people ask about HomePath mortgages but not just looking for HomePath houses.
Q: What are the buyer qualifications?
A: Most people right now don't realize their credit is good enough. There are a lot of young people living in apartments and having families, and they don't realize they qualify. Prices are so compressed right now that anybody can buy a house as long as their credit is decent. You need a minimum credit score of 660. An excellent score is 700 to 850, and good is 660 to 699.
Q: HomePath Renovation Mortgages include the money needed for both the purchase of the property and renovation costs — up to 35 percent of the "as-completed value" and no more than $35,000. Do buyers need to use approved contractors to do improvements funded by the HomePath loan, or can they do the repairs themselves?
A: There are several different answers; it depends on what the repair is. If it involves something needing a licensed contractor, the buyer needs to get a licensed contractor. If it's painting, the buyer can do that sort of thing. In most sales, appraisers sign off, with HomePath not needing an appraisal. I believe it goes case to case. The last one we did, the person was given a credit to fix it. When you haggle over a price, the buyer wants to get a discount to make it worth their while.
Q: What are some of the caveats to going this route?
A: Sometimes the house's condition may not be great. One sold in Ashland that was in fair to poor condition. There can be customer-service issues, as well, because banks will restrict the amount of commissions. As a result, the listing agent might not be able to respond as much as we do when we have a regular listing. While you don't have to go through the process of getting an appraisal, sometimes an appraisal is your friend. If I didn't know a lot about real estate, then that appraisal protects me. These days appraisers are gun-shy and make sure they cross all the T's and dot all the I's.