Waiting Period For Conventional Loan

Fannie Mae guidelines waiting period to qualify for a conventional loan after deed in lieu of foreclosure or short sale is 2 years from the recorded date of the deed in lieu of foreclosure and/or the short sale date reflected on the HUD’s settlement statement if the home buyer has 20% down payment of their own funds.  However, many conventional mortgage lenders have their own rules and guidelines when it comes to approving a conventional loan after deed in lieu or short sale with 20% down payment.  The additional stricter rules and guidelines set by the individual mortgage lender is what is called mortgage lender overlays.

Overlays On Conventional Loans

Just because Fannie Mae’s guidelines for conventional loan after deed in lieu or short sale is 2 years, that does not mean the mortgage lender has to honor it.  Many mortgage lenders will have their own mortgage lender overlays where they will require a mandatory waiting period of 3 year, 4 years, or even longer.  I get countless of inquiries from mortgage loan applicants who have been turned down by other mortgage lenders who need a conventional loan and have the 20% down payment on their home purchase.  I am a mortgage broker licensed in Illinois and Florida and have dozens of wholesale mortgage lenders who specialize in conventional loans.  Out of the dozens of wholesale conventional mortgage lenders I represent, only a select few will have no mortgage lender overlays when it comes to the 2 year waiting period for conventional loan after deed in lieu of foreclosure or short sale.  The majority of the conventional mortgage lenders do have their own conventional loan overlays.  Some conventional mortgage lenders have 3 year waiting period for a conventional loan after a deed in lieu and 4 years waiting period after a short sale or vice versa.

Automated Underwriting System: Approve/Eligible

In order to qualify for a conventional loan after deed in lieu or short sale with 20% down payment, the mortgage applicant needs to get an approve/eligible per Fannie Mae’s DU FINDINGS.  Without an approve/eligible, the deal cannot proceed.  The Automated Underwriting System is a sophisticated electronic underwriting system which analyzes the mortgage applicant’s income, credit, credit scores, credit history, debts, payment history, assets, public records, and all other factors in the mortgage application as well as the credit report and renders a decision within minutes.  To get an approve/eligible per DU FINDINGS for a conventional loan after deed in lieu or short sale, the mortgage applicant needs to have timely payment history in the past 12 months, credit scores north of 640 FICO,  proof of the 20% down payment, no lates after the deed in lieu and/or short sale, and preferably have rental verification.

Turned Down For Conventional Loan After Deed In Lieu Or Short Sale?

There are many conventional mortgage applicants who do meet the Fannie Mae conventional loan mortgage lending guidelines after a deed in lieu of foreclosure and/or short sale and have 20% down payment on their home purchase but get turned down for a conventional mortgage loan due to the mortgage lenders overlays.  You need to go to a mortgage broker who is affiliated with wholesale mortgage lenders with no mortgage lender overlays and will just go off the DU FINDINGS.  If you are a conventional mortgage applicant who had a deed in lieu of foreclosure and/or short sale and have passed the two year waiting period and have the 20% down payment but has gotten denied by other conventional mortgage lenders due to their internal mortgage lender overlays and are interested in a mortgage in Illinois,  California, Indiana, Texas, Georgia, Michigan, New Jersey, Pennsylvania, Nevada, Washington, North Carolina, Ohio, New York, and/or Florida, please contact me at 262-716-8151 and/or www.gustancho.com .

2015 Update On Conventional Loan After Deed In Lieu And Short Sale

The 2 year waiting period after deed in lieu of foreclosure and short sale with 20% down payment is no longer in effect as of last year ( 2014 ). New Fannie Mae Lending Guidelines on qualifying for a conventional loan after deed in lieu of foreclosure and short sale is four years from the recorded date of the deed in lieu of foreclosure or the date of the short sale which is reflected on the HUD Settlement Statement.

Gustan Cho

www.gustancho.com

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

Comments are closed.