Fannie Mae released new guidelines for the waiting period for purchasing a home after a short sale, foreclosure, and bankruptcy. In general, it appears that in an effort to streamline the process, they have made all waiting periods 4 years, which in some cases is an improvement and in others is a diminishment.
Fannie Mae announced that on August 16, 2014, they will be
changing the waiting period associated with the purchase of a new home after a
short sale or a deed in lieu of foreclosure, from a minimum of two years, to
four years.
Right now, there is a staggered waiting period that allows a
homeowner to purchase a new home with a Fannie Mae conventional loan two years
after the finalization of a short sale or deed in lieu of foreclosure. In order
to that, the buyer must provide a 20% down payment on the purchase of the new
home and have had clean credit since the event.
However, on August 16, 2014, the waiting period for a homeowner
to purchase a new home after a foreclosure becomes four years. The good news
though is that new home buyers will be allowed to follow standard Fannie Mae
guidelines and put as little as a 5% down payment down on the purchase of a
home after a short sale.
In addition, if a homeowner can prove that the short sale was
due to an extenuating circumstance (loss of job and/or wages), then the waiting
period may still be reduced to two years. However, unless a buyer has strong
documentation of this, the two year exception cannot be counted on.
In addition, they changed the guidelines with regards to foreclosure after bankruptcy:
Fannie Mae Waives Waiting Period on Foreclosure after
Bankruptcy...
Old Rule:
Foreclosure – 7 years waiting period in most cases.
New Rule:
If you filed Bankruptcy and included your home in the Bankruptcy
- the new waiting period is just 4 years from the date of Bankruptcy discharge.
Not only is this an improvement from the previous 7 year standard, in addition
home buyers are no longer penalized for the bank’s delay in getting the title
transferred to a new owner.
Effective immediately.
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