Fannie Mae Changing Rules on Waiting Period After Short Sale & Deed in Lieu

FNMA(Fannie Mae) has recently announced the minimum waiting period to obtain a new mortgage after a short sale or deed in lieu foreclosure is being reduced thus relaxing their rules. Effective, July 1, the wait will go from a minimum four to five years to two years. FNMA wants to encourage solutions for homeowners and to avoid foreclosure.

A minimum 20% down payment is required to qualify for the two year minimum payment. With 10% down the four year minimum will remain in place and less down will be longer. Foreclosures remain at a five year waiting period.

Extenuating circumstances, such as a job loss or a divorce, allows a two year minimum with 10% down. FNMA expects borrowers to reestablish their credit as well. Foreclosures and short sales generally have the same effect on a borrower's credit score. Three active revolving or installment debt credit trade lines for a twelve month payment history will be required. There should be no lates in that two year period. Nontraditional credit (utility bills, rent payments ... etc) will not be allowed.

FHA, with 3.5% down, is considering changes in their guidelines which currently requires a minimum of three years after a short sale or deed in lieu foreclosure. This could be a good thing

Tim Lorenz

Instant MLS Listings & Free Market Analysis

"We have actually closed many short sales!"

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Tim Lorenz . Over 40 Years Experience Representing South Orange County Home Buyers, Sellers, Investors and Relocations!