Waiting periods following a Deed-in-Lieu of Foreclosure, Short Sale or Mortgage Account Charge-Off have been REDUCED to a 4 year waiting period.
Please take a minute to read the following changes to Fannie Mae’s underwriting
Guidelines. This information has been provided by Dale Delliquadri at Mountain West Financial.
As communicated in the FNMA (Fannie Mae) Selling Guide Announcement SEL-2014-10, changes to the waiting period for Significant Derogatory Credit Events have been made as follows:
Waiting Period for Mortgage Debt Discharged through Bankruptcy
The Selling Guide has been updated to indicate that if a mortgage debt has been discharged through bankruptcy, even if a foreclosure action is subsequently completed to reclaim the property in satisfaction of the debt, the borrower is held to the bankruptcy waiting periods and not the foreclosure waiting period. Documentation must be obtained to verify that the mortgage debt in question was in fact discharged as part of the bankruptcy.
Waiting Period after Deed-in-Lieu, Short Sale or Mortgage Account Charge-off
Waiting periods following a Deed-in-Lieu of Foreclosure, Short Sale or Mortgage Account Charge-Off have been REDUCED to a 4 year waiting period, or 2 years if extenuating circumstances can be documented per guidelines (The 7 year waiting period for deed-in-lieu of foreclosure and short sale has been removed). In addition, the previous LTV restrictions tied to different waiting periods for Deed-in-Lieu of Foreclosure, Short Sale or Mortgage Account Charge-Off have been removed.
Requirements for Re-establishing Credit
After a Bankruptcy, Foreclosure, Deed-in-Lieu, Short Sale or Charge-Off of a mortgage account, the borrower’s credit will be considered re-established if all of the following are met:
- The waiting period and the related additional requirements are met.
- The loan receives a recommendation from DU that is acceptable for delivery to Fannie Mae or, if manually underwritten, meets the minimum credit score requirements based on the parameters of the loan and the established eligibility requirements.
- Non-traditional credit or “thin files” are not acceptable. Need 3 open trades reporting for past 12 months.
The Waiting Period for Mortgage Debt Discharged through Bankruptcy is effective immediately.
The Waiting Period after a Short Sale or Deed-in-Lieu of Foreclosure and Charge-Off Accounts of Mortgage Debt are effective with applications dated on and after August 16, 2014.
Please call or email me with any questions… Let me help make your dream of homeownership come true. I specialize in finding you the right loan that meets your specific needs and financial goals. With mortgage rates still near historic lows, make this year the year to make your homeownership dream come true. Please email me today Kathleen@BeckHomeLoanPro.com or call 916-722-0395 to get started on your dream of home ownership. Kathleen Beck A person you can count on. West Coast Mortgage Group 2716 Broadway Sacramento, CA 95818 NMLS#243181