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November 12th, 2012 7:45 AM by David W. Welch
I am seeing another glaring example of why we need a new secondary mortgage market system. Our market in Orlando has seen a great deal of improvement from the standpoint of inventory levels. Back in 2008 we had about 26,000 homes listed active in our MLS and there were also about 24,000 new homes in some phase of construction. About 8,000 of those were completed homes, and we only sold about 15,000 homes that year. We had roughly a three year supply when you include all those new homes. Today, bulders are pretty much just building homes for real buyers, and there are only about 7,500 homes listed active. Our months supply of inventory has dropped to just about a three month supply.
What does this have to do with Fannie Mae and HomePath? Well, from my observations Fannie is viewing this supply shortage as an opportunity to ask more money for their properties. There is nothing wrong with that, it's the free market system of supply and demand. The problem is they are asking way too much for many of their properties. Just one example I ran into recently was a very nice four bedroom, three bath home for $250,000. The problem is the house is worth about $220,000. No fear about appraisal though, just use HomePath. My understanding is HomePath does not require an appraisal, and you only have to put 3% down. With very little down on an overpriced home, you start out under water. If this were an isolated incidence I would not have an issue with it. I am seeing Fannie Mae properties like this all the time.
With only a three month supply of inventory and financing hard to get, desparate buyers I am afraid may be jumping on these bad deals. Fannie is doing this on their short sales too. Time and time again we are seeing Fannie as the investor that owns the note on a short sale. We get through the short sale approval, then Fannie comes back wanting more money; a lot more money. I recently got an $85,000 condo short sale all the way through the approval process, but then Fannie wants $120,000 to sign off on the deal. The moral of the story is beware of HomePath. It may not be such a good deal.
David Welch Real Estate Optimist, Orlando Real Estate, Search for Homes