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.

There is a loan limit of 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 combined loan to value ratio, CLTV’s, less than 75%.

10 Important Facts About HomePath Homes

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

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

3. You can choose your own title company.

4. Fannie Mae sells properties “as is”.

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

6.  3% down payment on owner occupied properties

7. NO mortgage insurance is available.

8.  Available for owner occupied and investment properties.

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

10. Eligible for HomePath Renovation Financing.

For more information go to HomePath FAQ.

Housing affordability is the greatest it has been in recent history. Government programs generously offer billions in tax credits and stabilization grants to create new homeowners. But industry sales practices have worked against consumers from the start, making it impossible for them to take advantage of these programs.

Owner-occupants have the power to turn this cycle around. The more ownership there is in neighborhoods, the more vitality there will be in local communities. Social scientists have linked high owner-occupancy rates to everything from decreased crime rates to improved educational achievement for children.

To give disadvantaged homebuyers a badly needed break, the Department of Housing and Urban Development (HUD), Freddie Mac, Fannie Mae and a few lenders have implemented new policies that offer them purchase advantages. From 15-day waiting periods to measuring owner-occupant sales of listing agents to clear priorities on owner-occupant purchases in the offer process, these guidelines attempt to create inroads for owner occupants. This is just the beginning of home buyer-favored mandates that will force new behavior in the sales and management of foreclosures in local markets.

When you buy a new home or refinance an existing home, you typically will be required to obtain an appraisal for the property. Getting an appraisal done involves hiring a licensed appraiser who produces an opinion of value in the form of an “official” appraisal. This number is known as the “appraised value” of the property.

Occasionally, when an underwriter reviews the appraisal provided by the licensed appraiser, they will engage in the sport of Appraisal Cutting by reducing the appraised value provided by the appraiser by a random, arbitrary number.

Appraisal Cutting – An Expanded Definition:

Appraisal cutting has long been practiced by many underwriters and has left plenty of potential homeowners wondering what exactly happened. It was a common practice for many transactions involving cash-out-refinances but had tapered off recently. Apparently, it still happens enough to catch the eye of Fannie Mae who recently announced that they are outlawing the practice of appraisal cutting by underwriters.

Effective Sept. 1, Fannie Mae is prohibiting lenders who sell loans to them from changing appraisers’ appraised value numbers. In guidance issued  on June 30, Fannie Mae said that if an underwriter has an issue with an appraised value, they must contact appraisers to “resolve” any disagreements about the valuation. If it is not possible to resolve an opinion-of-value dispute, then the only option available to the lender is to order a second appraisal – they are no longer allowed to just chop the value that the appraisal states.

Which makes sense – an appraiser goes through the licensing process and is a practicing licensed professional who physcially inspects the property and then comes up with an opinion of value based on his expert opinon according to standard methodologies.

So, according to Fannie Mae, it does not make any sense for an underwriter to to engage in appraisal cutting once the house has been appraised by a licensed appraiser.

Many condo and townhouse dwellers are already familiar with the “flip tax,” more formally known as a resale fee. Typically calculated as a percentage of the sale price, it’s a fee due to the condo association or community when an owner sells. These charges fund common-area maintenance or provide a boost to reserve funds, which benefits the association’s homeowners.h

But in some develpoments, homebuilders are including in contracts a 1% fee to be paid to them every time the house is sold for 99 years. This money goes directly into the builders’ pockets. That has the real estate industry and consumer protection groups up in arms.  ”It’s of no benefit to consumers,” said Kathleen Day, of the Center for Responsible Lending. “It’s another innovative way to price gouge. Every extra dollar they suck out of people’s wallets takes away from other spending. It’s not good for the economy.”

The issue has attracted the attention of Washington, where Rep. Brad Sherman, D-Calif., is leading a charge against the fees. “Consumers are not in a position to deal with another level of complexity, one that pits plain vanilla homes against ones that come with fees,” he said.

Freehold Capital Partners, the New York-based financial company that is developing the program, claims it has already signed up thousands of developers nationwide, representing hundreds of billions of dollars of development.

The company’s plan is to monetize that future income — essentially allowing developers to get paid now rather than later. To do that, Freehold would bundle together the estimated income from the future fees and sell that package to investors. It claims this new “asset” would be worth about 5% of the original home prices.

Still, most real estate experts are against these fees. A coalition of real estate industry organizations and community groups recently sent a letter to Treasury Secretary Tim Geithner recommending that he not allow Freehold’s securitization plan to go forward. In the letter, the coalition quoted Rep. Sherman, who called the fees “a new predatory scheme.”

In the past month, the Federal Housing Finance Agency proposed restricting Fannie Mae and Freddie Mac from buying or backing any mortgages that include home resale fees.

Freehold, of course, defends the program. Chief Operating Officer William White argues that the 1% resale fee will actually benefit consumers by lowering home prices: “No one will pay the same for a home with a [resale fee] as they would for the same home without the fee,” he said.

That would make buying a home easier — but reselling one at a profit harder. Meanwhile, builders could offset their lower initial selling prices by either collecting on the back-end income stream from future sales, or selling those future earnings off to investors.

No securitization package has yet been created, according to White. But he’s optimistic: “We have been pleased with Wall Street’s response to date.” Whether the program will ever gets off the ground is an open question: 18 states have already banned or restricted the practice, and if the FHFA proposal goes through, it could derail it entirely.

Between January and July of this year the total number of closed sales on Long Island has significantly exceeded closed transactions reported during the same time period in 2009. That is a result of the tax credit which was very effective in stimulating the housing market. However, as expected, now that the tax credit has expired, Long Island contracted sales have posted a 17.3 percent decrease from July 2009. There were 2,386 purchase agreements signed in July 2010 compared to 2,886 last July. This could be explained by the many would-be summer time buyers accelerating their purchases to take advantage of the tax credit.

In July, contracted home prices on Long Island were up and down amongst the three counties. Contracted home prices is a forward-looking indicator since it represents what deals have been recently written, not what deals have been closed. The July 2010 contracted median home price in Nassau County was $410,000 which represented a 2.5% increase over last July. In Suffolk County, the July 2010 contracted median home price slipped to $325,000, compared to $335,000 a year ago. Queens reported a contracted median home price of $350,000 which is 2.8 percent less than a year ago.

Industry experts predict that home sales in the short term are expected to slow before picking up later in the year providing the job market improves. Joseph E. Mottola, MLSLI CEO says, “To sum up the local housing market, would be to say that it is really trying to hold its ground until the job situation improves. Only after the employment picture begins to brighten will a stronger demand for housing be restored.”

After several failed attempts to fix the country’s housing sector, the takeover of mortgage buyers Fannie Mae and Freddie Mac, $787 billion worth of economic stimulus money, a massive overhaul of America’s health care system, and the biggest re-write of finance rules in 70 years, the government says it’s finally getting serious about solving a root cause of this Great Recession, the housing crisis.

This Tuesday, 08/17, the Treasury Department hosted Washington’s biggest event of the week, a “Conference on the Future of Housing Finance.”  This is where government officials, policy makers and private sector bigwigs discuss winding down arrangements for Fannie and Freddie, which have soaked up at least $127 billion in taxpayer dollars since Uncle Sam put them into conservatorship in September 2008.

“It is not tenable to leave in place the system we have today,” said Treasury Secretary Timothy Geithner in his opening remarks to the conference. Says Shaun Donovan, the Secretary for the Department of Housing and Urban Development (HUD): “The government’s footprint in the housing market needs to be smaller than it is today.” See full remarks of  Secretary Shaun Donovan  - Housing Finance Conference.

If the Obama administration’s track record on these types of gatherings is any indication, legislation is likely to follow soon. (The White House held similar forums on health care and financial reform in the months before major bills—both of which passed—were considered on Capitol Hill.) In the meantime we should keep an eye on the lobbying. The Mortgage Bankers Association, the National Association of Homebuilders, Bank of America, PNC Bank, Morgan Stanley, the National Council of State Housing Agencies and the National Association of Affordable Housing Lenders were among the participants in Tuesday’s conference. They and other groups will have a lot to say about this issue in the coming months.

Nonetheless, it’s highly doubtful that Congress will tackle Fannie and Freddie this year because of  upcoming election and a “lame-duck” session in November.  But this reform we hope could become the legislative issue of 2011.

Homeowners are now able to refinance

After months of hovering near 50-year lows, mortgage rates have fallen even further, into uncharted territory and to a level lenders say is finally igniting more homeowner refinancing. For this week the average interest rate on new 30-year fixed-rate mortgages was 4.44%, according to mortgage giant Freddie Mac. This week’s rate was down from 4.49% a week earlier and 5.2% in early April.

One reason activity is growing stronger is that today’s rates are not only lower, but refinancing has become cheaper. That is because investors have begun paying more for mortgage bonds than in the past, enabling lenders to use this additional money to cover some refinancing costs that borrowers would traditionally bear.

The economist for National Association of Home Builders, Robert Denk’s prediction is coming true. He said, “There will be softness in the summer months followed by firming conditions and momentum as the year unfolds and the economy strengthens”.

There is also the good news the Federal Housing  Administration ,FHA, underwater financing program  will be starting soon and is on track to help 3-4 million homeowners.

The percentage of American single-family homes with mortgages in negative equity fell to 21.5 percent in the second quarter from 23.3 percent in the first quarter and 23 percent a year ago, according to the Zillow Real Estate Market Reports. These underwater mortgages are one of the biggest banes of homeowners since negative equity makes many of them unqualified for home loan refinancing and prevents some from selling.

There is also additional good news since the HUD announced its Federal Housing Administration ,FHA, underwater financing program which should aid 3-4 million homeowners . FHA officials recommend that underwater mortgage holders contact their lenders to see if their bank or mortgage companies will be taking part in their program which starts September 7.

A beautiful Long Island home

Main Street may be about to get its own gigantic bailout from the government. Rumors are flying from Washington to Wall Street, that the Obama administration is about to order government-controlled lenders Fannie Mae and Freddie Mac to forgive a portion of the mortgage debt of millions of Americans who owe more than what their homes are worth- homes that are underwater.

An estimated 15 million U.S. mortgages – one in five – are underwater with negative equity of some $800 billion. On Christmas Eve 2009, the Treasury Department waived a $400 billion limit on financial assistance to Fannie and Freddie, pledging unlimited help. It is felt that the actual vehicle for the bailout could be the Bush-era Home Affordable Refinance Program, or HARP, a sister program to Obama’s loan modification effort. HARP was just extended through June 30, 2011.

The move, if it happens, would be a stunning political and economic bombshell less than 100 days before a midterm election in which Democrats are currently expected to suffer massive, if not historic losses. The key date to watch is August 17 when the Treasury Department holds a much-hyped meeting on the future of Fannie and Freddie.

The Republican leaders believe this rumor will become reality since GOPers and Democratic moderates in the Senate are unwilling to spend more taxpayer money on Stimulus. This latest housing plan would allow the White House to sidestep congressional objections and show voters it is doing something tangible about an economy that seems to be weakening. Wall Street bankers believe this rumor too and are alerting their clients privately to this possibility. If this rumor is true case workers are going to be working overtime trying to determine the how much is owed anf how to effectively disperse 800 billion to 15 million homeowners.

The president’s approval ratings are continuing to erode and Democrats are in real danger of losing the House and almost losing the Senate. The mortgage bailout would be a last-gasp effort to prevent this from happening and to save the Obama agenda. The political calculation is that the number of grateful Americans would be greater than those offended that they — and their children and their grandchildren — would be paying for someone else’s mortgage woes. So, it stands to reason that this is not just a rumor but a fact. We wait to see….Do leave your comments and feedback..

Beware of scammers

Recently, more than 30 people in New York have been charged in connection with mortgage-fraud scams as part of a nationwide federal crackdown dubbed “Operation Stolen Dreams.”  Preet Bharara, the U.S. Attorney for the Southern District of New York, announced charges in eight separate cases, with scams involving counterfeit documents, bogus loan-modification programs and loans to purchase properties that did not exist.

Almost half of the 38 defendants were charged as a result of an undercover investigation that recorded and videotaped people purchasing phony documents to use in support of fraudulent mortgage loan applications. There were more than 256 victims, dozens of financial institution and at least $29 million worth of fraudulent loans. This investigation is ongoing and could uncover more frauds.

A Queens, New York man pleaded guilty to leading a $10 million scheme that defrauded mortgage lenders. He admitted in the U.S. District Court in Manhattan that he headed a ring that recruited straw buyers to purchase homes and obtained more than two dozen fraudulent loans, according to prosecutors. Some targeted the Haitian-American community, claiming they would help on immigration and housing matters but instead use the victims’ information to create fake documents to obtain mortgages.

Here are some specific ways in which Mortgage Fraud occurs:

1. Property Flipping – An investor buys a house, gets it appraised much higher than it is worth and sells it off right away. This involves fraudulent appraisals, false loan documentation and exaggerated incomes in order to secure loans. Often, there are kickbacks across the board involving all the players in the transaction.

2. Nominee Loans/Straw Buyers – There are people who use stand-ins to do real estate transactions. The name and credit history of someone else is used or borrowed by another to borrow money and make big ticket purchases.

3. Fictitious/Stolen Identity – The applicant swipes the name, personal information and credit history of someone else and actually uses it to apply for loans. The crime may go beyond just mortgage fraud as it can also be compounded by cases of identity theft.

4. Foreclosure Schemes – This is a heartless case of preying on vulnerable people who are already at risk of losing their homes in foreclosure. Scamsters dupe the homeowners with the hope and promises of saving their homes if they cough up fees and payments or worse, deed transfers to the wrong hands.

5. Occupancy Fraud – When investors lie by claiming that they will live in an investment property as their primary residence or second home in order to acquire better terms for their loans, then they are breaking the law. I didn’t realize it but the reason for higher mortgage rates for investment properties is to protect lenders from the greater risks inherent in the business of lending to investors rather than primary home buyers.