Fannie Mae Waiting Period After DIL And Short Sale

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Fannie Mae Waiting Period After DIL And Short Sale

This BLOG On Fannie Mae Waiting Period After DIL And Short Sale Was UPDATED On March 1st, 2018

A deed in lieu of foreclosure (DIL)is an alternative to foreclosure.  DIL is when the homeowner and the mortgage lender comes to an agreement where homeowner will surrender title and the keys to their home in lieu of foreclosure.

  • In return, the lender will not come after homeowners for deficiency and a deficiency judgment is avoided
  • A deed in lieu of foreclosure is treated the same as a foreclosure when it comes to FHA mandatory waiting period mortgage lending guidelines.
  • Foreclosure Waiting Period Starts From Recorded Date when the deed is transferred out of homeowners name into lenders name

Fannie Mae Guidelines Waiting Period After DIL And Short Sale Versus Government Loans

Waiting periods are three years from the recorded date of the foreclosure or deed in lieu of foreclosure in order to qualify for a FHA Loans.

  • The waiting period time clock does not start until the date of the sheriff’s sale
  • Or the actual date the deed was transferred out of the homeowner’s name into the name of the mortgage lender and recorded at the county recorder’s office
  • Many homeowners who got foreclosed on or had a deed in lieu of foreclosure think that the waiting period starting date begins when they sign the paperwork and turn in their keys
  • This is absolutely not the case
  • Homeowners currently going through a deed in lieu of foreclosure or had a recent foreclosure, make sure name is out of the deed and recorded as such at county’s recorders office
  • There are many cases where homeowners thought that they transferred over the deed to their homes and thought that their waiting periods have started but are finding out that the deed is still in their names and that the waiting period did not even begin yet

Conventional Loan After Deed In Lieu Of Foreclosure

The waiting period is the same for FHA loans whether the homeowner had a foreclosure or deed in lieu of foreclosure.

  • FHA mortgage lending guidelines state that the home buyer needs to pass a three year waiting period from the recorded date of the foreclosure or deed in lieu of foreclosure
  • Remember that the waiting period starts from the recorded date when the homeowners name has been transferred out and the mortgage lenders name has been added on the deed of the home and recorded at the county recorder’s office
  • With conventional loan programs, there is a huge difference when it comes to mandatory waiting periods on foreclosures versus deed in lieu of foreclosures

Home Loan After Foreclosure

If a home buyer has had a previous foreclosure, THERE IS A MANDATORY WAITING PERIOD OF 7 YEARS AFTER THE RECORDED DATE OF THE FORECLOSURE FOR THE HOME BUYER TO QUALIFY FOR A CONVENTIONAL LOANS.

  • This is a very long time for someone to qualify for a conventional loan
  • unlike the more generous FHA guidelines of 3 years waiting period after the recorded date of the foreclosure and/or deed in lieu of foreclosure
  • There is only a TWO YEAR WAITING PERIOD TO QUALIFY FOR VA HOME LOANS AFTER FORECLOSURE, DEED IN LIEU OF FORECLOSURE AND/OR SHORT SALE
  • Under Fannie Mae Waiting Period After DIL And Short Sale THERE IS A FOUR YEAR WAITING PERIOD TO QUALIFY FOR A CONVENTIONAL LOANS AFTER A DEED IN LIEU OF foreclosure and/or short sale
  • REMEMBER, THE WAITING PERIOD IS 7 YEARS WAITING PERIOD TO QUALIFY FOR A CONVENTIONAL LOANS AFTER A FORECLOSURE
  • There is a huge waiting period difference between a foreclosure and an deed in lieu of foreclosure and short sale per Fannie Mae Waiting Period After DIL And Short Sale versus FHA and VA Home Loans
  • With a FHA, USDA, VA, the waiting period is the same whether it is a foreclosure , short sale or deed in lieu of foreclosure unlike Fannie Mae Waiting Period After DIL And Short Sale
  • The Gustan Cho Team at USA Mortgage has No Overlays On Conventional Loan After 4 Year Waiting Period

Fannie Mae Waiting Period After DIL And Short Sale is four years from the recorded date of the deed in lieu or short sale date.

Conventional Mortgage Lender Overlays

Getting a conventional loan after four years after a deed in lieu of foreclosure and/or short sale is a large percentage of our business at The Gustan Cho Team at USA Mortgage:

  • Even though Fannie Mae Waiting Period After DIL And Short Sale is four years, there are lenders that will require a seven year waiting period as part of their overlays

Overlays On Conventional Loans

Borrowers might get an automated approval per the Fannie Mae’s Automated Underwriting System but most conventional mortgage lenders may have one or more of the following mortgage lender overlays:

  • Rental verification
    • Some conventional lenders will ask up to 24 months rental verification even though DU FINDINGS does not ask for verification of rent
  • Re-established credit a minimum credit tradelines: 
    • Many mortgage lenders who consider doing conventional loan for conventional loan borrowers who had a prior deed in lieu of foreclosure and/or short sale after four year waiting period will require that they have the following lender overlays:
      • minimum amount of seasoned credit tradelines even though DU FINDINGS does not require any credit tradelines
      • Higher than 620 credit scores
      • Verification of rent
      • Reserves
      • Tradelines
      • No late payments after bankruptcy and/or foreclosure
    • Conventional loan programs do not have mandatory credit tradeline requirements
    • One particular mortgage lender asks for a minimum of 4 credit tradelines that has been seasoned for two years
    • No worries
    • The Gustan Cho Team at USA Mortgage has no overlays on conventional loans
    • As long as borrowers get an approve/eligible per DU FINDINGS, that is your final approval
  • Many lenders will have additional waiting period overlays for conventional loan after a deed in lieu of foreclosure and/or short sale
  • Even though the mandatory minimum waiting period for a conventional loan is four years after a deed in lieu of foreclosure and/or short sale, many lenders require 7 year waiting periods
  • Again, no worries
  • Fannie Mae and Freddie MaCguidelines is all we follow

 Conventional Loan After Short Sale

The same conventional loan guidelines apply for conventional loan borrowers who had a prior short sale as those qualification requirements for those who had a prior deed in lieu of foreclosure..

  • Borrowers with short sale in the past and have waited four years after the short sale date can qualify for a conventional loan
  • Similar to deed in lieu of foreclosures, most conventional loan mortgage lenders will have mortgage lender overlays
  • The most problematic overlays on conventional loans with a borrower having a prior short sale is instead of 4 year waiting period after a short sale the waiting period can get extended to 7 years
  • Again, no worries, because there are conventional loan mortgage lenders with no mortgage lender overlays, like myself, that will just go off the DU FINDINGS.
  • Short Sale:
    • No Waiting Period If borrowers were current on Mortgage Payments

There is no mandatory waiting period after homeowners had a short sale if they were current on monthly mortgage payments until the date of short sale.

  • This waiting period exemption on short sales applies for both FHA, VA, USDA, Fannie Mae, Freddie Mac Guidelines 
  • Unfortunately, many homeowners who do short sales are told by lenders to skip a mortgage payment for the short sale to be effective
  • This is a catch 22 situation
  • Homeowners thinking about doing a short sale on home, keep this in mind
  • Try to keep mortgage payments current until the date of the short sale 
  • This way borrowers are exempt of any waiting period requirements after short sale

2018 Update On Conventional Loan After Deed In Lieu of Foreclosure And Short Sale

New 2018 Conventional Loan Lending Guidelines to qualify for a conventional loan after a deed in lieu of foreclosure and short sale has been extended to four years with 5% down payment and re-established credit.  The 2 year waiting period after deed in lieu of foreclosure and short sale with 20% down payment to qualify for a conventional loan is no longer available.

Home Buyers who need to qualify for mortgage with a direct lender with no mortgage overlays on government and/or conventional loans can contact us at The Gustan Cho Team at USA Mortgage at 262-716-8151 or email us at gcho@loancabin.com. We are available 7 days a week, evenings, weekends, and holidays.

Gustan Cho

www.gustancho.com

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