What are HomePath Homes?

HomePath™ is the program that the Federal National Mortgage Association (FNMA), commonly known as Fannie Mae, uses to market and sell their real-estate-owned (REO) properties.

You have probably heard of Fannie Mae if you are in the market to refinance your home or purchase a home. Fannie Mae is a conventional loan type with a maximum loan amount of up to $548,250 for a single-family residence in the continental U.S.

Fannie Mae does not originate loans. Fannie Mae is a corporation that buys loans from banks and sells the mortgage packaged as mortgage-back security to investors. Fannie Mae guarantees the loans originated to their requirements and will cover the investor if the borrower defaults.

When a Fannie Mae home loan is foreclosed, the property becomes known as an REO. The goal is to sell the property in a timely matter to maintain stability in the neighborhood. Fannie Mae's HomePath™ REO homes are listed for sale on HomePath.com, with photos, descriptions, and financing options to help homebuyers locate a real estate agent and a lender for the purchase process.

The geographic search feature on HomePath™ may return void today in some states due to the current moratoriums on foreclosures. Presently, this is the case in California. However, once the moratoriums expire, the party is on. REO's may increase at levels similar to the 2008 real estate market.

Do you think this will happen? Does history repeat itself? Please let me know your opinion.

My strategy suggestion is to start preparing for the REO market now. Fannie Mae loan considerations include credit, capacity to pay back the loan, collateral, and capital.

Credit Score: You will need a median FICO® Score of at least 620 between the three major credit bureaus: Experian™, Equifax®, and TransUnion®.

Debt-To-Income Ratio: DTI, which compares your monthly debt payments to your before-tax monthly income, should be no higher than 45% in most cases to qualify for a Fannie Mae loan.

Down Payment: For second homes and investment properties, the down payment requirements are higher, but for a one-unit primary residence, the down payment needed could be anywhere from 3% to 5%.

Reserves: Reserves are the number of mortgage payments in your account in the event of a loss of income or other financial hardship. There could be up to 6 months with a Fannie Mae loan, although two months may be considered.

The Fannie Mae tool provides help options for homeowners impacted by Covid-19, a disaster, or housing affordability challenges. If Fannie Mae owns your loan you may qualify for programs providing payment relief such as a forbearance plan or loan modification. FNMA lookup tool:

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