One of the better deals in real estate is coming to an end, as Fannie Mae is retiring its HomePath mortgage options for foreclosed properties this fall.
Effective Oct. 6, both the HomePath Mortgage and HomePath Renovation Mortgage products are being discontinued. The two initiatives offer owner-occupant buyers and investors special financing arrangements on foreclosed homes in the Fannie Mae inventory.
The change comes at a time when the number of homes in foreclosure has fallen to its lowest level in six years, according to figures from Black Rock Financial.
The HomePath Mortgage program offers a number of incentives for buyers, including down payments of as little as 5 percent of the purchase cost, no mortgage insurance requirement and no lender-requested appraisal needed. Expanded seller contributions toward closing costs are also including.
The HomePath Renovation Mortgage allows buyers to borrow additional funds for light to moderate repairs or improvements to a foreclosed property, up to 35 percent of the purchase price to a maximum of $35,000.
New alternatives offered
In their place, Fannie Mae is introducing what it calls three new "financing flexibilities." These include allowing "interested party" contributions of up to 6 percent of the selling price, up from 3 percent currently allowed; allowing slightly higher loan-to-value limits for buyers financing 5-10 multiunit investment properties; and allowing properties with Fannie Mae-imposed resale restrictions to qualify for Fannie Mae-backed mortgages.
A similar program offered by Freddie Mac, called HomeSteps, continues to be available for foreclosed properties in a limited number of states.