Fannie Mae has updated their guidelines for shorts sales & deeds-in-lieu of foreclosure to remove the equity element. See below to learn more.........
Last November we wrote an article on lender guidelines for distressed situations, along with providing a matrix that highlighted the waiting periods required (click here to view this article). We are providing this article to update that information.
Fannie Mae has removed the loan-to-value element in their guidelines. Now all short sales and deeds-in-lieu of foreclosure have a 4-year waiting period, regardless of the loan-to-value. The only exception to this rule is if extenuating circumstances can be met to lower that waiting period requirement down to 2 years.
OLD RULES
7-year waiting period if < 10% equity
4-year waiting period if 10% - 20% equity
2-year waiting period if > 20% equity
NEW RULES
4-year waiting period **
** If extenuating circumstances are able to be documented, the waiting period requirement can be reduced to just 2 years.
HOW YOU CAN USE THIS:
- For those with < 10% equity, this new guideline has shortened the waiting period from 7 years down to just 4 years.
- For those with extenuating circumstances, it may be possible to lower that 4-year period down to just 2 years.
- Check your database to see if you have any clients whom this guideline change may impact.
Contact us with any questions...we are here to help grow your business!