Home Partners of America and New Penn Financial have announced the Ownership Conversion pilot, allowing first-time homebuyers in Home Partners’ Lease Purchase program (and meeting Fannie Mae’s eligibility requirements) the ability to use any appreciation of the home they rent towards their down payment. New Penn is currently the exclusive lender for the pilot. The pilot will be available until late 2019.
“Our goal is to provide our clients a transparent and flexible path to homeownership,” says Bill Young, co-founder and CEO of Home Partners. “Many people want the benefits of living in a single-family home but are not yet ready to buy for a variety of reasons. We are committed to helping as many of our residents succeed when the time is right. The Ownership Conversion Pilot provides potential first-time homebuyers with the flexibility to prepare for homeownership while renting a home and the potential to reduce their down payment requirements.”
“Home Partners’ residents have worked hard to establish and maintain good credit,” says Robert O’Han, senior vice president of Consumer Direct Channel at New Penn Financial. “New Penn is proud to be the lender that is financing the dream of homeownership.”
“Given the sizeable demographic shift of millennials moving from renters to homeowners that we expect will play out over the next decade or more, Home Partners of America is in the right space at the right time,” says John Peyton, CEO and president of the Realogy Franchise Group. “Through Home Partners’ program, our network of affiliated agents and brokers are empowered by a trusted relationship through which they can offer their rental clients a new path to homeownership.”
How It Works
Under Home Partners’ Lease Purchase program, approved applicants work with a licensed real estate agent of their choosing to select the right home for them. Applicants can choose from a wide portfolio of homes available for sale across the country that meet Home Partners’ criteria. Home Partners purchases the selected home, leases the home to the resident with pre-determined rents and provides a right-to-purchase at pre-set prices for a defined future period (three to five years). While the resident’s only financial commitment is to lease the house for one year, he or she may renew the lease for additional one-year terms (generally three to five years).
Current and new residents in Home Partners’ Lease Purchase program are eligible to participate in the Ownership Conversion Pilot and may have the opportunity to take advantage of any appreciation equity once they have demonstrated 24 months of consecutive on-time payments, completed homeownership education or counseling, and meet other underwriting and eligibility criteria.
Residents who participate in this pilot could benefit from features and requirements that include:
- If the home goes up in value during the rental period, the resident could receive the benefit of appreciation when it comes time to purchase the home;
- Residents may qualify for a mortgage using as little as their security deposit as a down payment or towards closing costs;
- The rental period gives residents time to prepare for homeownership, repay other debts, such as student loans, or save for closing costs; and
- Residents are positioned for long-term success by being required to complete homeownership education or counseling.
Home Partners’s existing residents may be eligible for the pilot immediately after launch if they have already met the 24-month timely payment and counseling/education requirements. Additionally, new residents who begin Home Partners’ Lease Purchase program during the two-year period after the pilot launch date may be eligible for the pilot, as well.
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