2 Year Waiting Period After Short Sale And Deed In Lieu To Expire Midnight August 15, 2014

Conventional Loan After Short Sale

Gustan Cho Associates

The 2 year waiting period after a short sale and deed in lieu of foreclosure with a 20% down payment to qualify for a conventional mortgage loan will come to an abrupt halt effective midnight August 15, 2014.  New Fannie Mae Guidelines will eliminate the 2 year waiting period after a short sale and deed in lieu for conventional loans and change the terms of the waiting period to 4 years.  Currently, a home buyer can qualify for a conventional loan 2 years after a short sale or deed in lieu as long as the home buyer has 20% down payment and re-established credit.  There is a 4 year waiting period after a short sale or deed in lieu of foreclosure to qualify for a conventional loan as long as the home buyer has a 10% down payment.

4 Year Waiting Period After Short Sale And Deed In Lieu To Qualify For A Conventional Loan

Home buyers who have the 20% down payment and had a short sale or deed in lieu of foreclosure two or more years ago only have two days to submit their mortgage applications along with the real estate purchase contract.  As long as the signed mortgage application, disclosures, and real estate contract is submitted by August 15, 2014 and registered, home buyers can still take advantage of the 2 year waiting period after a short sale or deed in lieu of foreclosure.  If they miss this last chance opportunity, the waiting period to qualify for a conventional loan after a short sale or deed in lieu of foreclosure is 4 years.

Good News With New Fannie Mae Guidelines

The 4 year waiting period after a short sale or deed in lieu of foreclosure comes with good news.  Currently, the waiting period is 4 years after a short sale or deed in lieu of foreclosure for home buyers with only a 10% down payment.  However, with the New Fannie Mae Guidelines on qualifying for a conventional loan after a short sale and deed in lieu of foreclosure, the minimum down payment has been lower from the 10% down payment to 5% down payment.  Home buyers can now qualify for a conventional loan after a deed in lieu of foreclosure and/or short sale in 4 years with only a 5% down payment.

Other Factors

Just waiting out the waiting period and having the 5% down payment is not the only qualification.  Fannie Mae also want to see that the mortgage loan applicant has had no late payment history since the short sale and/or deed in lieu of foreclosure and re-established credit.  Having a history of late payments, collections, charge offs, and judgments after the short sale and/or deed in lieu of foreclosure will not work and shows financial irresponsibility on behalf of the mortgage loan applicant unless there are extenuating circumstances.

Related> Buying after short sale guidelines changes to 4 years

Related> Rules change August 2014 to buy after short sale

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Related> Fannie Mae Revisions

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