New Mortgage After a Short Sale or Foreclosure

Waiting Period For A New Mortgage After Short Sale/Foreclosure Changes:

Fannie Mae announced changes to the policies regarding the amount of time that must elapse after a borrower experiences a preforeclosure event (preforeclosure sale, short sale, and deed-in-lieu of foreclosure). The changes highlighted the importance of borrowers working with their servicers to avoid foreclosure.

Currently, the waiting period that must elapse after a borrower experiences a foreclosure is seven years. However, Fannie Mae allows a shorter time period – five years – if certain additional requirements are met (e.g., minimum down payment and credit score, and occupancy requirements). These requirements are being modified to remove the five year option. Unless the foreclosure was the result of documented extenuating circumstances, which only requires a three-year waiting period (with additional requirements), all borrowers will now be required to meet a seven-year waiting period after a prior foreclosure to be eligible for a new mortgage loan eligible for sale to Fannie Mae.

The following table describes the waiting period policy changes for foreclosures:

The following table summarizes the waiting period requirements for all significant derogatory credit events.

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Please contact us at the Twin Cities Short Sale Realtor if you have any questions.