August 7th, 2014 4:49 PM by Sam Kader MLO130505
Conventional loan applications taken on August 16th 2014 - Fannie Mae will require 4-Year waiting period regardless of the down payment. The 4-year waiting period is waived to 2 years if borrowers can prove that the event leading up to the short sale was due to extenuating circumstances. Freddie Mac will also provide its approval after 2 years of short sale date IF borrowers can demonstrate extenuating circumstances such as income reductions due to loss of jobs, serious illness or death of a wage earner that are beyond their control that ruined their credit. Both Fannie Mae and Freddie Mac require applicants to show 12 months of solid credit behavior and participate in a HUD approved housing-counseling programs.
FHA follows the same as Freddie guidelines and If you can qualify under FHA's back to work initiative - you can obtain FHA financing with 3.5% down in as little as 1 year instead of current 3 years. FHA further stipulated that there must be at least 20% decreased in income for at least 6 months that contributed to their delinquency. Borrowers must be able to demonstrate that they are now back to work paying their bills on time for the last 12 months after the short sale and earning enough to qualify for a new FHA-insured mortgage. Borrowers need not be current 12 months prior to the short sale. Borrowers must attend 1 hour HUD approved housing-counseling programs. This program will be manually underwritten and borrowers need to meet all requirements per the Mortgagee Letter 13-26.
Short sale, Deed-in-lieu or foreclosure- What you should know.