Ingrid B. Quinn

NMLS ID #211652 Arizona, Loan Consultant


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Short Sale/Deed in Lieu Seasoning per Fannie Mae

MortgageTroubles
New Fannie Mae loan changes on the horizon could affect you! If you’ve recently had a short sale or deed-in-lieu of foreclosure (DIL) and are looking to purchase a home again, here’s what you need to know:
Fannie Mae announced that on August 16th of this year there will be changes to regulations. For several years now, Fannie Mae has allowed buyers that previously were involved in a pre-foreclosure hardship (short sale, or deed in lieu), to buy again using Conventional financing in as little as 24 months with a 20% down payment and a minimum 680 credit score.
After August 16th, this early purchase programs is being retired, and replaced with longer waiting period, but with much less strict down payment and credit score requirements. Buyers that experience a short sale or deed in lieu of foreclosure are able to buy again using Conventional financing after a four (4) year waiting period.
From what we understand, it appears that after the four (4) years from a short sale or deed in lieu, that you can qualify using the standard Conventional qualifying requirements of a minimum 620 credit score, and 5% down payment.
Exceptions: If a homeowner can prove that the short sale was due to an extenuating circumstance such as job loss and can provide strong documentation, then the waiting period may still be reduced to two years.
There are still options other than conventional conforming programs to assist buyers purchasing a home prior to 4 years. FHA & VA financing have shorter waiting periods; 3 years for FHA financing and 2 years for VA. Also, there are portfolio products available where a time limit does not exist but terms of that type of a loan are significantly less favorable than previously described programs.
If you have questions or comments, please feel free to contact me. Visit http://www.cobaltmortgage.com/ingridquinn or email me at Ingrid.quinn@cobaltmortgage.com.