Short-Sale Waiting Period Extended to 4 Years for Conventional Loans
Beginning Aug 16th conventional loans will require a 4 year waiting period after Short-Sale or Deed-in-Leu . Prior to this there was a 2 year wait (Fannie Mae backed loans) if you had a 20% down-payment and a 4 year wait with 10% down-payment. There is a way around this if you have “extenuating circumstances“. For most people this is not going to be the case. Extenuating circumstances are hard to prove and underwriters are not normally eager to sign off on them.
Oh no! What will we do? The good news is that we have a Portfolio “2nd Chance” loan that has no required waiting period after Short-Sale. There’s no need to prove extenuating circumstances and the downpayment ( 20% ) is the same as conventional loans required before the change.
The waiting period requirements for borrowers who have had a previous deed-in-lieu of foreclosure or preforeclosure sale are being updated to now require a four-year waiting period; though a two-year waiting period will be permitted if the event was due to extenuating circumstances and the loan complies with all requirements specific to a deed-in-lieu of foreclosure or a preforeclosure sale due to extenuating circumstances, as specified in the Fannie Mae Selling Guide. The loan-to-value restrictions previously tied to different waiting period timeframes are also being removed.
– From Fannie Mae Desktop Originator/Desktop Underwriter Release Notes – June 17, 2014