The 227,000-member Kinecta Federal Credit Union has become one of the financial institutions that Fannie Mae has authorized to provide mortgages to the purchasers of Fannie’s HomePath properties.
HomePath properties are those that the secondary mortgage market giant wound up owning after the housing crash and crisis that it has made available to the public at substantially reduced prices. HomePath mortgage providers are those that are authorized to write mortgages for the HomePath properties under terms that are generally more favorable to borrowers than conventional loans but might not be as beneficial to some borrowers as loans backed by the Federal Housing Administration or Veterans Administration, according to housing experts.
Only 62 financial institutions and other mortgage firms nationwide have been named as HomePath mortgage providers and only four credit unions. In addition to Kinecta, the 342,000-member, $2.9 billion Desert Schools Credit Union is listed as HomePath mortgage provider for properties in Arizona and the 3.7 million member, $44.1 billion Navy Federal Credit Union is listed as eligible to provide HomePath Mortgages around the country. The 173,000 member, $2.4 billion Lake Michigan Credit union is also listed as both a provider of HomePath mortgages and HomePath renovation loans.
A spokesman for Fannie Mae said the organization looked to mortgage providers that had both a history of working with real estate professionals and locations in the parts of the country where Fannie Mae had most of its REO for inclusion in the program. He also indicated that that program was not signing up new mortgage providers, at least for now.
"HomePath mortgage providers have a long-standing history of active lending and outreach to real estate professionals in our top REO markets," wrote Andrew Wilson, a senior manager for Fannie Mae in an email. "We currently have sufficient HomePath financing coverage with our existing lenders, including our credit union partners, and we do not anticipate adding any new lenders."
The HomePath mortgage program allows purchasers of Fannie Mae owned properties in the HomePath program to have lower down payment options and not face lender-required appraisals or mortgage insurance requirements, Kinecta explained said.
"Kinecta is constantly looking for ways to offer more affordable financing options to potential homeowners," said Brian Robinett, senior vice president and chief credit officer at Kinecta. "With the HomePath mortgage, borrowers receive special financing terms on single-family homes, condominiums and town houses in a variety of neighborhoods. It's a great option for virtually anyone looking for a home, from first-time homebuyers to experienced investors."
Mike McCarthy, director of mortgage production for Kinecta, said the credit union had been surprised at the degree of interest from its members about the program. Members can find the REO properties online from Fannie Mae, through real estate agents and firms and from the CU. In the 45 days that it has been offering them, McCarthy reported, Kinecta took in roughly 29 applications for the loans.
Kinecta spokesman Angelica Urquijo said the program has been particularly popular with members from the lower income parts of Los Angeles that would not have had as much of a chance to purchase real estate without it. "The bottom line for us is that this is very good for our members," she said.
McCarthy explained that much of the caution Kinecta might feel about financing the purchase of REO home was alleviated by Fannie Mae's role in the sale, both as the seller of the home and as possible purchaser of the loan. Essentially, if Fannie Mae is both selling the home and likely buying the loan, McCarthy explained, the credit union is less concerned about property value.
McCarthy said Kinecta had been emphasizing the opportunity the properties represented for its members. "One statistic I saw the other day indicated that REO properties were selling at a 30% discount," McCarthy said.