Conventional Loan After Bankruptcy
By Gustan Cho
Fannie Mae has made major changes with regards to waiting periods after bankruptcy, foreclosure, deed in lieu of foreclosure, and short sales effective immediately. This new Fannie Mae guidelines can be viewed both as positive and negative by conventional mortgage loan applicants who need to qualify for a residential mortgage loan.
Fannie Mae: Breaking News Effective Immediately
Effective 29 June, 2014, Fannie Mae announced that those homeowners who had a foreclosure included as part of their bankruptcy and the mortgage loan was included in the bankruptcy petition, the waiting period starts effective of the date of the bankruptcy discharge date even though the mortgage lender has not transferred the deed of the home into their names. Before this new Fannie Mae rule, even if you had a mortgage loan part of the bankruptcy, the waiting period for the foreclosure did not start until the homeowners name was transferred into the name of the mortgage lender and recorded in the county’s recorder of deeds office. There are thousands of folks who had their mortgage loan included as part of their bankruptcy years ago but the mortgage lender refuses to transfer the deed into their name and out of the mortgage loan borrowers name. These people’s waiting period did not even begin yet but now with Fannie Mae’s new waiting period guidelines on having a foreclosure part of their bankruptcy, things will change and now they can qualify to purchase a home.
Changes In Qualifying For Conventional Loan After Short Sale And Deed In Lieu
There are new changes to qualify for a conventional loan after a short sale and deed in lieu of foreclosure. Currently, a person who had a prior short sale or deed in lieu of foreclosure can qualify for a conventional loan as long as they have a 20% down payment and re-established credit after the short sale and deed in lieu of foreclosure. However, this will come to a halt starting August 16, 2014. The two year waiting period after a short sale or foreclosure with 20% down payment will be totally eliminated. The new waiting period to qualify for a conventional loan after a short sale or deed in lieu will be a 4 year waiting period. Currently, those conventional mortgage loan applicants who only have a 10% down payment can qualify for a conventional loan after a short sale or deed in lieu of foreclosure after a 4 year waiting period after the short sale or deed in lieu. With the new Fannie Mae guidelines in qualifying for a conventional loan after a short sale or deed in lieu of foreclosure, the waiting period is 4 years but only a 5% down payment is required. The 20% down payment and 10% down payment requirement has been eliminated.
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