Conventional Mortgage After Short Sale And Deed In Lieu

5

This BLOG On Conventional Mortgage After Short Sale And Deed In Lieu Was UPDATED On May 5th, 2019

What is a conventional mortgage after a short sale and deed in Lieu

Homeowners who have had a deed in lieu of foreclosure or a shortsale can qualify for Conventional Mortgage After Short Sale And Deed In Lieu after 4 year waiting period.

  • The 4 year waiting period start clock starts from the recorded date of the deed in lieu and/or short sale date
  • The waiting period is extended to 7 years after standard foreclosure to qualify for Conventional Loans
  • There is a mandatory 3 year waiting period after the recorded date of foreclosure/deed in lieu to qualify for USDA And FHA Loans
  • There is a two year waiting period after the recorded date of foreclosure/deed in lieu and/or short sale to qualify for VA Loans
  • Fannie Mae and Freddie Mac changed the 2 year mandatory waiting period after a deed in lieu of foreclosure or short sale for a conventional loan with 20% down payment is no longer valid

Waiting Period Requirements On Conventional Mortgage After Short Sale And Deed in Lieu

Fannie Mae waiting period after a deed in lieu of foreclosure or short sale guidelines will allow a mortgage loan borrower to qualify for a mortgage loan after 4 years from the date of the deed in lieu of foreclosure or a short sale with 5% down payment. Re-Established credit and no late payments are normally required. One or two late payments after a housing event and/or bankruptcy is not a deal killer.

Qualifying For Conventional Mortgage After Short Sale And Deed In Lieu

How to qualify for a traditional mortgage after a short sale and deed in Lieu

One of the many mistakes potential homeowners make is that they take for granted that they will automatically qualify for a conventional mortgage loan if they had a prior deed in lieu of foreclosure or a short sale.

  • Home Buyers can qualify for Conventional Mortgage After Short Sale And Deed In Lieu if they meet the 4 year waiting period
  • Fannie Mae and/or Freddie Mac set the conforming guidelines with requirements on the waiting period for a conventional mortgage after short sale and deed in lieu of foreclosure
  • Just because the four-year waiting period has elapsed, it does not automatically insure conventional mortgage approval
  • The borrower needs an automated underwriting approval by Fannie Mae and/or Freddie Mac.
  • Not everyone gets an approved eligible per AUS FINDINGS
  • Mortgage Applicants needs to meet other Conventional Mortgage Guidelines.
  • The automated underwriting system will evaluate all other aspects of borrowers credit, assets, liabilities, and income

Automated Findings On Automated Underwriting System

The automated underwriting system is like a brain and takes into account every aspect of the mortgage loan applicant.

  • Automated Underwriting System analyzes the following in a matter of seconds:
    • Credit scores
    • Past delinquencies
    • Bankruptcy if any
    • Foreclosures if any, tax liens if any
    • Payment history, late payments
    • Charge offs if any
    • Debt to income ratio, judgments
    • Payment plans
    • Forbearance
    • Employment history
    • Assets, liabilities
    • Other factors are taken into consideration by AUS prior to issuing automated approval.
  • The automated underwriting system will be more selective in approving those who have had a prior deed in lieu of foreclosure or short sale right after the 4-year mark
  • Chances of approval might be greater as more time elapses

Approve/Eligible Per Automated Findings

How to approve / I qualify for automated arrangements

  • The lender will only approve a mortgage loan borrowers 4 years after a deed in lieu of foreclosure or short sale
  • Approved eligible findings from the automated underwriting system is required
  • Although borrowers have exceptional credit, asset, and income, they still need an approved eligible from the Fannie Mae automated underwriting system
  • Another option borrowers might have is to have a lender who is willing to do a manual underwrite which not many will do manual underwriting on conventional loans

Other Factors

I strongly recommend that home buyers do not enter into a real estate purchase contract on a home until they wait out the 4-year waiting period.

  • I have seen too many cases where home buyers get antsy
  • They enter into purchase contracts prior to the 4-year waiting period and stress out
  • Can it be done? 
  • Of course but there is no guarantee

Update On Conventional Loan After Deed In Lieu And Short Sale

The importance of updating the conventional post-deed loan in Lieu and short selling

The two year mandatory waiting period after a deed in lieu of foreclosure or short sale with a 20% down payment on a home purchase is no longer in effect.

  • Fannie Mae and Freddie Mac extended the waiting period to qualify for a conventional loan after a deed in lieu of foreclosure and/or short sale to a four year waiting period with a minimum of 5% down payment.

Mortgage Loan Applicants with any questions on waiting period after a deed in lieu of foreclosure or short sale, please contact us at 262-716-8151 or text us for faster response. Our email is gcho@gustancho.com.

Gustan Cho NMLS ID 873293

Leave A Reply

Your email address will not be published.

Call Now ButtonCALL NOW