Fannie Mae is considering reviving the HomeStyle Renovation Mortgage program
Back in June, Fannie Mae ended its home repair subsidy program that offered $3,000 for the borrower during his first six months in the property. Now, the office is deciding whether to renew or modify the program as its latest measure to prop up the housing market hasn’t had huge impacts in the economy. The latest of which is the HomePath.com program that was supposed to sell foreclosed properties with better terms and financing. But critics chided officials for not looking ahead. New York for example, has not so many foreclosure listings available for the taking.
Now, Fannie Mae is considering reviving the HomeStyle Renovation Mortgage program in the hopes of stimulating the homebuilding industry again. It allows borrowers to combine the home purchase cost with the costs for renovation or repair. At closing, all funds for renovation will be escrowed in an interest-bearing account. After the renovation, any remaining funds in the escrow account will be used to pay down the principal balance of the mortgage.
It’s a good program so I think they should bring it back but with some modifications.
First, when lenders determine the additional value that the renovation may bring to the property, they must think about the renovation’s suitability to the owner’s current lifestyle. Borrowers have to justify their plans.
Second, Fannie Mae should expand its program scope and features to attract more beneficiaries who also qualify in FHA 203k rehab loans. The latter has simple application process and Fannie Mae can simply follow that.
Finally, they should extend the program’s duration to allow more homeowners to qualify. Since many haven’t recovered yet from joblessness and the financial slump, it would be wiser to wait for them to get back on track.