FNMA Guidelines On Foreclosure On Conventional Loans

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FNMA Guidelines On Foreclosure On Conventional Loans

This BLOG On FNMA Guidelines On Foreclosure On Conventional Loans Was Written By Bianca Piverger of Gustan Cho Associates Mortgage Group

There have been changes to the FNMA Guidelines On Foreclosure.

  • Fannie Mae and Freddie Mac are the two mortgage giants in the United States that set mortgage lending guidelines and requirements for Conventional Loans
  • Conventional Loans are also called conforming loans
  • It is called conforming loans because they need to conform to the rules, regulations, and mortgage guidelines created and implemented by Fannie Mae and Freddie Mac
  • Conventional Loan Guidelines are different than FHA Lending Guidelines, VA Lending Guidelines, and USDA Lending Guidelines
  • FNMA Guidelines On Foreclosure is more complex than FHA Guidelines On Foreclosures
  • FHA pretty much has the same waiting period to qualify for FHA Loan after foreclosure, deed in lieu of foreclosure, and short sale
  • However, FNMA Guidelines On Foreclosure has different waiting periods after foreclosures, deed in lieu of foreclosures, short sales
  • If borrower had a prior mortgage part of bankruptcy where the foreclosure was recorded at a much later date than the discharged date of the Chapter 7 Bankruptcy the following applies:
    • 4 year waiting period from discharged date of bankruptcy
    • borrower cannot have reaffirmed the mortgage
    • date of housing event does not matter
    • however, the housing event needs to be finalized

FNMA Guidelines On Foreclosure Waiting Period

As mentioned on the first paragraph, FHA requires the same waiting period to qualify for a FHA Loan after a foreclosure, deed in lieu of foreclosure, and short sale.

  • We will be comparing FHA Loans versus Conventional Loans on this blog since they are two of the most popular mortgage loan programs
  • The waiting period to qualify for a FHA Loan after a deed in lieu of foreclosure, foreclosure, and short sale is three years
  • With foreclosures and deed in lieu of foreclosure, the waiting period starts from the date of the sheriff’s sale and/or the date where the name of the borrower of the mortgage note was transferred out of their name and into the name of the mortgage lender
  • Many people think that the waiting period starts from the date they turned in the keys to the bank
  • But that is not the case
  • The three year time clock starts from the date of the short sale which is reflected on the HUD Settlement Statement with qualifying for a FHA Loan after a short sale

With Conventional Loans, FNMA Guidelines On Foreclosure state that there is a mandatory 7 year waiting period to qualify for a Conventional Loan from the date of the sheriff’s sale.

  • Or the date where the homeowner’s name was transferred out into the mortgage lender’s name
  • Fannie Mae and Freddie Mac has different waiting period requirements after a foreclosure, deed in lieu of foreclosure, and short sale

For those who had a prior short sale or deed in lieu of foreclosure, Fannie Mae and Freddie Mac requires that the Conventional mortgage loan borrower has pass a four year mandatory waiting period after the recorded date of the deed in lieu of foreclosure and/or short sale to qualify for a Conventional Loan.

  • There is a four year waiting period to qualify for a Conventional Loan after a Chapter 7 Bankruptcy discharged date
  • There is a two year mandatory waiting period to qualify for a Conventional Loan after a Chapter 13 Bankruptcy discharged date

FNMA Guidelines On Foreclosure With Mortgage Part Of Bankruptcy

Borrowers with a mortgage part of bankruptcy , there is a four year mandatory waiting period from the discharge date of your Chapter 7 Bankruptcy to qualify for a Conventional Loan:

  • This holds true even though the actual foreclosure and/or short sale did not happen after the discharged date of the Chapter 7 Bankruptcy discharged date
  • This is a major positive for those seeking to qualify for a Conventional Loan
  • This is because this only applies for Conventional Loans and not other mortgage loan programs
  • For example, if you had a mortgage part of bankruptcy and wanted to qualify for a FHA Loan, there is a three year mandatory waiting period after the recorded date of the foreclosure and/or short sale even though the mortgage was part of the Chapter 7 Bankruptcy discharge
  • There are many times where lenders take their sweet time
  • Some may even take several years to finalize a foreclosure where the homeowner had the mortgage part of bankruptcy

Home buyers looking for a Conventional Mortgage Lender with no overlays, please contact Bianca Piverger at Gustan Cho Associates at Loan Cabin Inc. at 954-732-8217 or text for faster response. Or email Bianca at bianca@loancabin.com. Bianca is available 7 days a week, evenings, weekends, and holidays to take your phone calls and answer any questions you may have.

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