Effective on applications dated Aug 16, 2014 or later:
The waiting period requirements for borrowers who have had a previous deed-in-lieu foreclosure or pre-foreclosure sale (Short Sale) are being updated to now require a four-year waiting period; though a two-year waiting period will be permitted if the event was due to extenuating circumstances* and the loan complies with all requirements specific to deed-in-lieu of foreclosure or a pre-foreclosures sale due to extenuating circumstances, as specified in the Fannie Mae Selling Guide.
The loan-to-value restrictions previously tied to different waiting period time frames are also being removed. For loan applications taken before August 16, 2014, the lender must document that the event was completed two or more years from the disbursement date of the new loan, and that the loan complies with all other requirements specific to a deed-in-lieu of foreclosure specified in the Selling Guide in order for the loan to be eligible for delivery to Fannie Mae.
Please note: Contrary to other information floating on the world wide web, this does not include foreclosure events. Currently, Fannie Mae has a 7 year waiting period policy after foreclosure.
Quick Reference Guide to Fannie Mae Short Sale/Foreclosure Policy:
Up until August 16, 2014:
Short Sale/Deed In Lieu - 80% LTV on purchase or rate and term after two years.
Short Sale/Deed In Lieu - 90% LTV on purchase or rate and term after four years.
Foreclosure - waiting period 7 years.
After August 16, 2014
Short Sale/Deed in Lieu -95% LTV on purchase or rate and term after four years.
Foreclosure - waiting period 7 years.
Further updates and clarification will become available over the next few weeks through Fannie Mae.
All information gathered via the Fannie Mae release notes DU Version 9.1 August update - June 17, 2014.
*Extenuating Circumstances---the next extenuating circumstance granted by an investor will be the first.
**FHA, VA, USDA, Jumbo guidelines are not impacted by Fannie Mae changes. (See more here)
Regards,
Craig Turley
Southwest Direct Mortgage, LLC
NMLS 61314/AZ BK 0908190
MLO 80917/AZ LO 0920382
Craig is a well respected 20 year veteran of the mortgage profession. He has been directly responsible for over $1 Billion in funded loans and prides himself on providing exceptional customer service AND the best mortgage advice in the industry. In today's challenging mortgage environment, EXPERTISE and EXPERIENCE make all the difference.
