What Was the Fannie Mae HomePath Program? A Look Back at Its Benefits and How It Worked

The Fannie Mae HomePath program was a specialized mortgage initiative designed to facilitate the sale of Fannie Mae-owned foreclosed properties. The program officially ended on October 14, 2014, but it offered unique benefits like low down payments and no private mortgage insurance (PMI) for qualified buyers while active. This article provides a historical overview of how the HomePath program functioned, its key benefits, and the types of properties it included.

What Were HomePath Mortgage Products?

HomePath mortgage products were specialty financing options available exclusively for purchasing real estate owned (REO) properties by Fannie Mae. These were typically homes acquired through foreclosure or a deed-in-lieu of foreclosure—a process where a borrower voluntarily transfers the property title to the lender to avoid foreclosure. Following the housing crisis, Fannie Mae held a significant inventory of these properties and created the HomePath program to streamline their sale to owner-occupants and investors.

What Benefits Did the HomePath Program Offer?

The HomePath financing program provided several advantages not commonly found in standard mortgages, making it an attractive option for buyers at the time. Key benefits included:

• Low Down Payment: A minimum down payment of just 5% was required for owner-occupied primary residences. Investment properties and second homes required a 10% down payment.
• No Private Mortgage Insurance (PMI): Unlike conventional loans with less than a 20% down payment, HomePath loans did not require borrowers to pay for private mortgage insurance, a type of insurance that protects the lender if the borrower defaults. This resulted in significant monthly savings.
• Streamlined Appraisal Process: In many cases, no lender-ordered appraisal was required, which sped up the closing process and reduced upfront costs for the buyer.
• Flexibility for Condos and Investors: The program waived certain condo and co-op project approvals and offered flexibility for investors, including allowing title to be held in an LLC and financing for up to 20 properties.

How Were HomePath Properties Identified?

Prospective buyers could search for eligible properties on the official HomePath website. These homes were marked with specific logos on their listing pages. A standard HomePath logo indicated eligibility for the core mortgage program. A second "HomePath Renovation" logo designated properties eligible for an enhanced loan that allowed borrowers to finance up to 35% more than the purchase price (capped at $35,000) for repairs and improvements.

Who Were the Approved HomePath Lenders?

Fannie Mae did not originate loans directly. Instead, buyers were required to work with a HomePath-approved lender, a financial institution specifically authorized to underwrite and fund these specialty loans. A current list of approved lenders was maintained on the HomePath website, and it was essential for buyers to use one of these lenders to access the program's benefits.

Conclusion

While the Fannie Mae HomePath program is no longer active, it served as a valuable tool for many buyers and investors to purchase properties between its inception and its conclusion in 2014. Its key benefits, such as the low 5% down payment and the absence of PMI, made homeownership more accessible for a specific inventory of homes. For those considering similar opportunities today, researching current REO properties and first-time home buyer programs offered by other government-sponsored enterprises like Freddie Mac is a recommended starting point based on our experience assessment.