Great News for Buyers with a Short Sale!
New Eligibility Rules Announced From Fannie Mae!
There's great news from Fannie Mae for home buyers who have experienced a short sale or deed in lieu of foreclosure. To help the housing market's continued stability, Fannie Mae is changing the "waiting period" (i.e. the amount of time that must elapse after the preforeclosure or short sale event) before home buyers can qualify for a loan.
Several factors will impact these changes, including the required down payment or loan to value (LTV) for the transaction and whether extenuating circumstances contributed to the individual's financial hardship (e.g. a job loss). The following chart highlights the new rules:
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Preforeclosure Event
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Current Waiting Period Requirements
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New Waiting Period Requirements (1)
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Deed-in-Lieu of Foreclosure
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4 years |
2 years – 80% maximum LTV ratios
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Preforeclosure Sale
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2 years
|
4 years – 90% maximum LTV ratios |
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Short Sale
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No policy currently exists specific to short sales
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7 years – LTV ratios per the Eligibility Matrix |
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Exceptions to Waiting Period for Extenuating Circumstances
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||
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Preforeclosure Event
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Current Waiting Period Requirements
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New Waiting Period Requirements (1)
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|
Deed-in-Lieu of Foreclosure
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2 years |
2 years – 90% maximum LTV ratios
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Preforeclosure Sale
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No exceptions are permitted to the 2-year waiting period
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|
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Short Sale
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No policy currently exists specific to short sales
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(1)The maximum LTV ratios permitted are the lesser of the LTV ratios in this table or the maximum LTV ratios for the transaction per the Eligibility Matrix.
Note that the terms 'short sale' and "preforeclosure sale' are both referenced in Fannie Mae’s announcement and have the same meaning – the sale of a property in lieu of a foreclosure, resulting in a payoff of less than the total amount owed, which was pre-approved by the servicer.
The bottom line: Buyers who have experienced a short sale or deed in lieu of foreclosure may be eligible for financing sooner than previously expected…especially if they have 20% to put down. If you have any buyer prospects who may benefit from this change, I’d be happy to help you put them in a home.
Read the full announcement from Fannie Mae.
Sincerely,
Guy V Jones & Lance Scott
Integra Lending Group, LLC
985-206-0960
ls@integralg.com
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