Fannie never had an official policy about how they would treat people who had a short sale or a deed-in-lieu of foreclosure in their past. Well, Fannie's SEL 2010-05 spells it out for you.
If a person gave back their home to the lender, prior to it going thru the long foreclosure process, Fannie says they will consider giving another loan after 2 years, a maximum of 80% LTV (20% down payment) and re-established credit.
If home was a short-sale, it's 4 years, and 90% LTV (or 10% down payment) OR 7 years and minimum down payment. (5%). It's the time versus the money thing.
Let's talk about re-establishing credit after a short sale or deed-in-lieu. In addition to these below, the minimum credit scores must be met (varies between lenders)
1. Waiting period is defined as from the date of the short-sale/deed, to the date of application
2. Must receive automated underwriting approval
3. Establish "traditional" credit thru banks, finance and credit cards
Real Estate Agents-- let their clients (who have or are selling their home with short-sale) of the waiting time periods too.
Go back thru your database of short-sale deals and send an email advising of the new rule.
Or better yet, hold a seminar, with a credit repair expert because this will be a huge niche market a couple of years from now--even NOW!
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