Waiting period after a foreclosure, deed in lieu of foreclosure, short sale
For those who were homeowners during the economic meltdown of 2008 probably have fallen victims of the real estate market crash where their home values have plummeted. Some homeowners have lost over half the value of their homes in areas of California, Illinois, Florida, Arizona, California, Nevada, and other states. Foreclosures hit historical levels and millions of American homeowners could no longer afford to keep their homes. Millions of Americans had no option but to give their homes back to their mortgage lenders. Mortgage lenders were foreclosing on millions of homes nationwide. Some homeowners offered to surrender their homes for a deed in lieu of foreclosure while others offered to sell their homes at a discounted market rate often known as short sale.
Recovery After Real Estate Meltdown
The good news is that many Americans have re-established their lives and re-established their credit from the financial nightmare of 2008 and can now afford to own homes. However, Fannie Mae and FHA came up with new mortgage lending guidelines where they established a waiting period for those home buyers who have had a prior foreclosure, deed in lieu of foreclosure, or short sale. FHA recognizes a deed in lieu of foreclosure and short sale as a regular foreclosure and the waiting period is 3 years from the date of the sheriff’s sale or the date the homeowners name was transferred into the bank’s name.
Waiting period after a deed in lieu of foreclosure and/or short sale for conventional loans
For those homeowners who have had a deed in lieu of foreclosure and/or short sale can qualify for a regular conventional loan as long as they can put down a 20% down payment after a two year waiting period from the recorded date of their deed in lieu of foreclosure or short sale. However, just passing the two year waiting period does not necessarily guarantee a Fannie Mae automated underwriting system approval. The automated underwriting system will analyze the mortgage loan borrower’s credit scores, payment history, late payments if any, assets, liabilities, debts, and other negative and compensating factors. If the mortgage loan borrower did not have any late payments after the deed in lieu of foreclosure or short sale and has re-established their credit, the chances are favorable that they will get an automated underwriting system mortgage loan approval by Fannie Mae.
No waiting period for short sale that has no late payment history until the short sale has been finalized
If you are a homeowner who had a short sale and your payments were current up to the date of the short sale, there are no waiting period restrictions for you to apply for a mortgage loan. You also could not have been late on any other payments preceeding the finalization of the short sale such as credit card payments, student loans, installment loans, and automobile loans. There a many homeowners who had a short sale who were current with their mortgage loan and were told by their mortgage lenders to skip the last payment of their mortgage payment in order to finalize the short sale. Unfortunately, even though you were told by the mortgage lender to skip that last payment, that last payment costed you a three year waiting period. There are folks out there who do not realize this loophole and qualify for a mortgage loan because they were current with their mortgage payments until the finalization of their short sale. Please contact me at www.gustancho.com if you have any questions on this matter.
2015 Update On Conventional Loan After Deed In Lieu And Short Sale
Unfortunately, the 2 year waiting period after short sale and/or deed in lieu of foreclosure with 20% down payment to qualify for a conventional loan is no longer in effect since August of 2014. New Fannie Mae Guidelines to qualify for a conventional loan after short sale and deed in lieu of foreclosure is 4 years from the date of short sale or 4 years from the recorded date of the deed in lieu of foreclosure with 5% down payment. Waiting period after a regular foreclosure to qualify for a conventional loan is 7 years from the recorded date of the foreclosure. Waiting period on short sale for FHA Loans is 4 years from the date of short sale. Waiting period on short sale for VA Loans is 3 years from the date of short sale. Waiting period on short sale for USDA Loans is 4 years from the date of the short sale reflected on the HUD to qualify for a USDA Loan.