Fannie Mae Waiting Period After Deed In Lieu And Short Sale

This BLOG On Fannie Mae Waiting Period After Deed In Lieu And Short Sale Was UPDATED On January 6th, 2018

Freddie Mac and Fannie Mae are the two mortgage giants that sets conventional mortgage guidelines.

Conventional Loans are not guaranteed by any government agencies. Then why do lenders need to conform to Fannie Mae and/or Freddie Mac Mortgage Guidelines?

  • The reason is if lenders do not conform to Fannie/Freddie Guidelines, they cannot sell the conforming loans they originate and fund to the secondary market
  • Fannie Mae and Freddie Mac does not purchase mortgages that do not meet their conforming guidelines

Qualifying For Conforming Loans After Housing Event

The Federal Housing Finance Agency (FHFA) is the regulatory agency in charge of Fannie Mae and Freddie Mac. Conforming Loans have separate waiting period requirements after a deed in lieu of foreclosure and short sale versus standard foreclosure.

Homeowners who had a prior deed in lieu of foreclosure or a prior short sale in the past four years can now qualify for a conventional loan after four years. 5% down payment is required and need an per approve eligible per DU/LP FINDINGS.

  • Even with an Automated Underwriting System approval, some lenders may have mortgage lender overlays
  • Waiting period after regular foreclosure is seven years

The waiting period clock does not start until the deed has been transferred out of the homeowners name and/or date of the short sale.

Lender Overlays On Conventional Loans

Mortgage Lender Overlays are mortgage guidelines that is above and beyond those of Fannie Mae and/or Freddie Mac imposed and implemented by individual lenders.

  • Mortgage loan originators do not know everything mortgage loan program either due to the enormous amount of rules and regulations
  • There are not too many conventional mortgage companies that offer conventional loans with no lender overlays
  • The Gustan Cho Team at USA Mortgage is a direct lender with no overlays on conventional loans
  • Official approval is the AUTOMATED UNDERWRITING SYSTEM DU APPROVE ELIGIBLE
  • As long as the information stated on the mortgage application can be verified and confirms and all conditions met, borrowers will close on their conventional loan with The Gustan Cho Team at USA Mortgage

Examples Of Mortgage Lender Overlays

Home Buyers are interested in pursuing a conventional loan after four year waiting period after deed in lieu of foreclosure or short sale can qualify for conforming loans with no lender overlays at USA Mortgage.

Here are some examples of overlays conventional mortgage lenders can require:

  • 12 months rental verification
  • Minimum of 3 to 4 credit tradelines that has been seasoned for a minimum of 12 months and sometimes 24 months
  • Minimum credit score requirements
  • No late payments in the past 12 to 24 months
  • Some lenders may require no late payments after bankruptcy and/or housing event
  • Reserves
  • Compensating factors

Down Payment Required After Fannie Mae Waiting Period After Deed In Lieu And Short Sale

The old Fannie Mae Waiting Period After Deed In Lieu And Short Sale is different than the new 2018 Fannie Mae Waiting Period After Deed In Lieu And Short Sale:

  • Old Fannie Mae Waiting Period After Deed In Lieu And Short Sale was the following:
    • The 20% down payment was mandatory to qualify for a conventional loan after two years of deed in lieu of foreclosure and/or short sale
    • The old Fannie Mae Waiting Period After Deed In Lieu And Short Sale was two years
    • If borrower  only have a 10% down payment, then the waiting period is four year with the old Fannie Mae Gudielines.  For down payments less than 10%, the waiting period is 7 years
    • Conventional mortgage lending guidelines are stricter than FHA lending guidelines
    • For anyone that had a foreclosure or bankruptcy, the mandatory waiting period is 7 years for a conventional loan
    • For USDA And FHA loans foreclosure, deed in lieu of foreclosure, short sale all have a three year waiting period 
    • VA Loans only require a two year waiting period after foreclosure, deed in lieu, short sale

2018 Fannie Mae Waiting Period After Deed In Lieu And Short Sale

On August 2014, Fannie Mae has eliminated the conventional loan program after 2 year waiting period after deed in lieu of foreclosure and short sale with 20% down payment.

  • Home buyers with a prior short sale and/or deed in lieu of foreclosure can now qualify for a conventional loan four years after a deed in lieu of foreclosure and/or short sale with 5% down payment on home purchase
  • Those home buyers who had no ownership in a home in the past three years can now qualify for a conventional loan with 3% down payment
  • To qualify for a conventional loan after a standard regular foreclosure, the waiting period remains at a 7 year waiting period

Home Buyers who need a lender with no overlays on conventional and government loans can contact The Gustan Cho Team at USA Mortgage at 262-716-8151 or email us at gcho@usa-mortgage.com. We are available 7 days a week, evenings, weekends, and holidays. We close 100% of all of our pre-approvals because our pre-approvals are full credit mortgage loan approvals fully underwritten and signed of by our mortgage underwriters.

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.

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