Robert Adams Massachusetts Real Estate

Conventional loan program changes! "...now allows borrowers that had a foreclosure included in a BK to buy after 4 years instead of waiting 7 years..."

9/15/2014

I have received this email below from several lenders over the past few days explaining the NEW time requirements for buyers with previous short sales and foreclosures. As of August 16th you can not get conventional financing after only 4 years from your foreclosure if it was included in a BK. this is down from 7 years previously. That is the good news. The bad news is that buyers with previous short sales now have to wait 4 years instead of 2 years. So this change could help you or negatively impact you. Please call us today for more info.

"Robert,
Several people have reached out to me with questions regarding Fannie Mae's recent guideline changes. These changes affect borrowers that have had short sales and borrowers that had BK's with foreclosures involved.

As of August 16th, 2014 it might be harder to buy a new property after experiencing a short sale, assuming you plan on using conventional financing. The prior guideline allowed you obtain a Fannie Mae loan just two years after short selling your previous home even without extenuating circumstances as long as you had at least 20% down payment.

The new Fannie Mae guideline states:

There will be a standard four-year waiting period after short sale, with a two-year waiting period if you can prove extenuating circumstances.

*Freddie Mac has a standard four-year waiting period after short sale as well.
** FHA allows borrowers who have had short sales to get mortgages after just three years (without extenuating circumstances).
***Fannie Mae defines an extenuating circumstance as nonrecurring events that resulted in sudden/significant reductions in income, or a catastrophic increase in your financial obligations.

Call, Text, or Email as soon as you have mortgage questions and when your clients need to be Pre-Approved!

P.S. SILVER LINING That same guideline change now allows borrowers that had a foreclosure included in a BK to buy after 4 years instead of waiting 7 years. Let me know if you have buyers that may be in this situation."