New Fannie Mae Guidelines On Waiting Period For Conventional Loan: Effective August 15, 2014

Home Loan With No Lender Overlays

Gustan Cho Associates

Home buyers or homeowners who had a prior deed in lieu of foreclosure or short sale could qualify after waiting period for conventional loan after deed in lieu of foreclosure or short sale after two years from the recorded date of the deed in lieu of foreclosure or 2 years from the short sale date reflected on the HUD settlement statement as long as they had a 20% down payment for a home purchase or at least 80% loan to value on a conventional refinance mortgage loan.  Those Fannie Mae Guidelines have changed just recently and the two year waiting period to qualify for a conventional loan with a 20% down payment on a home purchase or 80% loan to value on a conventional refinance mortgage is no longer in effect.  Fannie Mae has announced new guidelines on waiting period for conventional loan and implemented that the two year waiting period after a deed in lieu of foreclosure and/or short sale will increase from the current two year waiting period to four years effective August 15, 2014.

New Fannie Mae Guidelines: Waiting Period For Conventional Loan Is 4 Years After Deed In Lieu Of Foreclosure And Short Sale

The New Fannie Mae Guideline waiting period to qualify for a mortgage loan after 4 years only applies to those who had a deed in lieu of foreclosure, short sale, and bankruptcy.  To qualify for a conventional loan after a bankruptcy was always four years from the discharge date of the bankruptcy and remains the same.  For those who had a prior standard foreclosure, the waiting period is 7 years from the recorded date of the foreclosure.

Down Payment Requirement With New Fannie Mae Guidelines

The great news with the extended waiting period after deed in lieu of foreclosure and/or short sale to 4 years to qualify for a conventional loan is that the home buyer no longer needs to come up with a 20% down payment.  Home buyers who had a prior bankruptcy, deed in lieu of foreclosure, or short sale can now purchase a home with as little as 5% down payment.  The 20% down payment requirement is no longer in effect.

New Fannie Mae Guidelines With Foreclosure Part Of Bankruptcy

Great news for homeowners who had a foreclosure as part of their bankruptcy.  New Fannie Mae Guidelines now state that if you had a foreclosure included in your bankruptcy, the waiting period will start from the discharge date of your bankruptcy and not the recorded date of your foreclosure.  Currently, if you have a foreclosure included in your bankruptcy, the foreclosure waiting period does not start until the foreclosure has been transferred out of your name and into the name of the mortgage lender or new home buyer.  There are thousands of cases where homeowners included their foreclosures as part of their bankruptcy many many years ago and the waiting period after the foreclosure did not even start yet because the mortgage lenders would not transfer the deed out of the homeowners name into the mortgage lenders name.  With the new Fannie Mae Guidelines with regards to foreclosure part of bankruptcy, it will open doors to tens of thousands of home buyers qualify for a conventional loan.

How Do I Qualify For Conventional Loan After 4 Year Waiting Period?

Just passing the 4 year after a deed in lieu of forclosure, short sale, or bankruptcy does not automatically guarantee you a conventional mortgage loan approval.  Conventional mortgage lenders will carefully review each mortgage applicant’s credit and income profile.  Mortgage lenders will not want to see any late payment history after a deed in lieu of forclosure, short sale, or bankruptcy.  Mortgage lenders want to see established credit or re-established credit.  Strong compensating factors are required such as reserves, larger down payment, rental verification, and lower debt to income ratios.

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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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