2018 Fannie Mae Guidelines On Mortgage After Foreclosure

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2018 Fannie Mae Guidelines On Mortgage After Foreclosure

This BLOG On 2018 Fannie Mae Guidelines On Mortgage After Foreclosure Was UPDATED On September 19th, 2018

Fannie Mae and Freddie Mac are the two mortgage giants that sets conventional mortgage requirements. Conventional Loans are also called conforming loans because they need to conform to Fannie Mae and/or Freddie Mac Guidelines.

Government Loans are the following:

  • FHA Loans
  • VA Home Loans
  • USDA Loans

Government Versus Conventional Mortgages

Government Loans are insured and guaranteed by the above government agencies in the event borrowers of these loans default and the property goes into foreclosure.

  • Private lenders originate and fund both government and conventional loans
  • No government entity insures conventional loans
  • However, banks and mortgage companies originate and fund conventional loans
  • Once they fund conventional loans, these loans are packaged up and sold on the secondary market to Fannie Mae and Freddie Mac
  • In order for Fannie/Freddie to purchase these loans, they need to conform to Fannie/Freddie mortgage guidelines
  • Both government loans and conventional loans have waiting period after bankruptcy, foreclosure, deed in lieu of foreclosure, short sale

How Does Fannie Mae Differentiate Foreclosure Versus Deed In Lieu Of Foreclosure

There are new 2018 Fannie Mae Guidelines On Mortgage After Foreclosure in qualifying for a conventional loan.

  • Fannie Mae and Freddie Mac treats Deed In Lieu Of Foreclosure and Foreclosure differently, unlike government loans
  • Government Loans (FHA, VA, USDA) classify foreclosure, deed in lieu, and short sale the same with regards to waiting period requirements
  • All mortgage programs have their own mortgage guidelines in qualification requirements after foreclosure and deed in lieu of foreclosure for home buyers to qualify 
  • FHA treats Mortgage After housing event differently than Fannie Mae Guidelines On Mortgage After Foreclosure
  • FHA, for example, has a three year mandatory waiting period after the recorded date of foreclosure, deed in lieu of foreclosure, short sale
  • All waiting period after foreclosures, deed in lieu of foreclosures, short sale start from the date of the sheriff’s sale and/or the recorded date of the foreclosure and/or deed in lieu of foreclosure
  • Not the date where the homeowner has surrendered the keys to their lender or signed the foreclosure and/or deed in lieu of foreclosure documents but the actual recorded date where the deed has been transferred
  • Waiting period after short sale starts from the date of the short sale reflected on the closing paperwork (Closing Disclosure)
  • There a tens of thousands, if not hundreds of thousands, of homeowners who went through the foreclosure and/or deed in lieu of foreclosure process many years ago
  • However, their waiting period did not start yet because the mortgage lender did not transfer the deed out of the homeowners name into their name
  • These folks did not even start the waiting period

Fannie Mae Guidelines On Waiting Period After Foreclosure Versus Deed In Lieu Of Foreclosure

Fannie Mae and Freddie Mac have different waiting period requirements on foreclosure versus deed in lieu of foreclosure.

  • 2018 Fannie Mae Guidelines On Mortgage After Foreclosure mandates a 7 year waiting period for a home buyer to qualify for a conventional loan
  • However, to qualify for a conventional loan after a deed in lieu of foreclosure and/or short sale is a four year waiting period after deed in lieu of foreclosure and a four year waiting period after a short sale
  • Both the waiting period after the foreclosure or deed in lieu of foreclosure start date is the date of the sheriff’s sale or the date the homeowner’s name was taken off the deed of the property

2018 Fannie Mae Guidelines On Mortgage Part Of Bankruptcy

The great news for conventional mortgage loan borrowers is that if a homeowner had a mortgage, or mortgages part of bankruptcy .

  • 2018 Fannie Mae Guidelines On Mortgage Part Of Bankruptcy states that the following:
    • If homeowner had a mortgage, or mortgages ( real estate investor who had mortgage than one mortgage included in Chapter 7) as part of Chapter 7 Bankruptcy , the waiting period to qualify starts on the discharged date of Chapter 7 Bankruptcy
    • The recorded date of foreclosure, deed in lieu of foreclosure, short sale can be after the discharged date of Chapter 7 Bankruptcy
  • The waiting period for those who had a mortgage part of bankruptcy is four years from the discharge date of Chapter 7 bankruptcy
  • This is regardless of when the housing event was recorded
  • The housing event needs to have been finalized in order to qualify
  • Cannot have re-affirmed the mortgage
  • In most cases, the foreclosure is recorded at a much later date than the discharge date of Chapter 7 bankruptcy
  • This rule on mortgage part of bankruptcy only applies to conventional loans and not FHA Loans, VA Loans, USDA Loans

Government Loans Versus Fannie Mae Guidelines On Mortgage After Foreclosure With Mortgage Part Of Chapter 7 Bankruptcy

With FHA Loans, if homeowner have a mortgage part of Chapter 7 bankruptcy, there is a three year waiting period after the recorded date of foreclosure to qualify for a FHA Loans

  • The three year waiting period start clock begins from the date of the sheriff’s sale of the foreclosed property and not the discharge date of the Chapter 7 Bankruptcy
  • The recorded date of the foreclosure can be much later than the discharge date of the Chapter 7 Bankruptcy
  • With VA Loans, if borrower had mortgage part of Chapter 7 Bankruptcy, the waiting period is two years from the recorded date of foreclosure, deed in lieu of foreclosure, short sale and NOT the discharged date

Mortgage Borrowers who had a mortgage part of bankruptcy and it has been at least four years from the discharge date of Chapter 7 Bankruptcy can qualify for a conventional loans. This is still if foreclosure and/or deed in lieu of foreclosure got recorded at a later date or the short sale happened past the discharged date of the Chapter 7. Home Buyers and/or Homeowners who need to qualify for government and/or conventional loans with a direct lender with no lender overlays, please contact us at Gustan Cho Associates Mortgage Group at 262-716-8151 or text us for faster response. Or email us at gcho@gustancho.com. We are available 7 days a week, evenings, weekends, and holidays to answer any questions you may have.

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