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Monday, April 19, 2010

Fannie Mae updates "Waiting Period" following Pre-Foreclosure Events

by Calculated Risk on 4/19/2010 03:27:00 PM

From Austin Kilgore at HousingWire: Fannie Shortens Wait for Some Distressed Borrowers to Get New Loans

Fannie Mae announced it is reducing the wait time for some borrowers between when they complete a short sale or deed-in-lieu of foreclosure transaction and when they can obtain a new mortgage.

Previously, a borrower was required to wait four years before getting a new mortgage, or two years if their home sold in a short sale. Under the new guidelines, a borrower that previously completed a deed-in-lieu of foreclosure transaction can get a new mortgage in two years, provided the borrower has a 20% down payment.

If the borrower has a 10% down payment, the wait period is still four years.
Here is the update from Fannie Mae. For other loans (mostly higher risk loans), the period has been increased to seven years (per the eligibility matrix).

A couple notes: Several reports are mentioning the shorter waiting period (2 years instead of 4 years), but that is just for borrowers who put 20% down. This update also makes the policy consistent for short sales and deed-in-lieu of foreclosure transactions - and for the first time explicitly mentions short sales (since these are becoming much more common).