Foreclosed properties are one of the biggest factors in the real estate market.  Buying a foreclosed home isn’t for everyone, but if you know what you are looking for, you can find bargains. Foreclosures can come form banks, loan servicers and other entities, and the red tape and bureaucracy involved in getting a purchase together and closed, can make it a rough ride. The lenders have a need to sell, but because they are understaffed, and the loan often has to be approved by someone higher up the food chain, you need to have patience and resolve. But some players have moved further along the curve than others, and have come up with more systematic ways of cleaning out their inventory. Fannie Mae, the biggest buyer of loans in the mortgage after market, has 89,000 homes that are now on their books, and they have worked out a system to help buyers find and finance these properties at terms that work for more home buyers. They have developed the Homepath website where buyers can go to find Fannie Mae foreclosed homes, and the Homepath financing program as a way to offer financing with terms that better fit the unique problems of foreclosed homes.

Homepath financing is only available for specific Fannie Mae foreclosed homes, and you don’t have to use the Homepath financing. It makes sense to compare options. Depending on your situation and the condition of the property, other financing may make more sense. But in many cases the Homepath will be the best option, and it will usually be the easiest way to close on the home. These homes are all available for purchase immediately, and though the listing price is set by Fannie and listed through a broker, you can use your own Realtor and negotiate the price and terms, just like any other listing.

Here are some of the advantages of Homepath financing:

• Financing with as little as 3% down for owner occupants.
• Financing for investors with as little as 10% down. (Investors can finance up to 10 properties.)
• No mortgage insurance required (there are price overlays which increase the rate).
• Fixed rates, ARMs and even interest only loans are available (you will need more equity for interest only loans).
• Fannie Mae allows up to 6% for seller concessions (2% for investors) – make this a part of your offer and it will go a long way toward bringing down the interest rate.
• No appraisals are required, you use the sale price as the value.
• Can be used for primary residences, second homes and as investment properties.
• More lenient credit standards than for other conventional mortgages.
• 3% down payment can come from a gift.
• More relaxed condo documentation and approval requirements.

One thing to keep in mind with Homepath, is that the terms are great, but the price can be high. They start with a base price but with overlays (price hits) the actual price may be much higher. One of the keys to this program is that they allow up to 6% in seller concessions – be sure and ask for all you can get when you make the offer.

Here is the website which lets you search for all the properties eligible, you can break it down so by county, town or zip code to see what is in the area you are most interested in -  http://www.homepath.com/. If you want to see how the financing works, and compare it to other options, give me a call and I can tell you what will work out best.

Peter Thompson                             630-479-6424

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