Fannie Mae Guideline Changes - Seasoning on Mortgage in Bankruptcy
We have seen many changes in past 3+ years for mortgage borrowers. Finally Northern Virginia home buyers there is positive change in the requirement after foreclosure or bankruptcy. I have already worked with home buyers who went through a short sale due to circumstances beyond their control now adding to this pool will be home owners who had filed bankruptcy or had foreclosure.
Fannie Mae Guideline Changes - Seasoning on Mortgage in Bankruptcy
In a rare event of loosening guidelines, Fannie Mae has issued guidance
on changes that will have a positive impact on people who have had a mortgage included in a bankruptcy.
In the past, if a mortgage was included in bankruptcy and a lender proceeded to foreclosure to recoup their losses, borrowers were held to foreclosure seasoning guidelines, meaning they could not obtain a new conventional loan until 7 years after the foreclosure event.
Under the new guidance, effective immediately, these borrowers will be held to bankruptcy seasoning guidelines and not foreclosure guidelines, meaning it will be possible for a borrower to get a conventional mortgage 4 years after a chapter 7 bankruptcy, even if a lender proceeds with a foreclosure on their home if the mortgage was included in the bankruptcy. IF there were extenuating circumstances that led to the bankruptcy, the seasoning required is only 2 years from the discharge date.
Fannie Mae Bankruptcy Seasoning Guidelines
Chapter 7 Bankruptcy?
Fannie Mae requires a 4 year wait from the discharge date to obtain new conventional financing. 2 years if extenuating circumstances can be documented.
Chapter 13 Bankruptcy?
Fannie Mae requires a 2 year wait from a completed, discharged Chapter 13. If the Chapter 13 is dismissed for any reason prior to completion, there is a 4 year wait. Again, the wait is 2 years if extenuating circumstances can be proven.
Multiple Bankruptcies?
If a borrower has multiple bankruptcies in a 7 year period, Fannie Mae requires a 5 year wait from the last dismissal/discharge date.
This change in guideance could help many borrowers who have had a bankruptcy event within the past 5 years and lost their home as a result. IF a mortgage was included in the bankruptcy, many of these folks could now qualify for a new conventional loan, when in the past they would have been forced to wait 7 years.
Know someone who's gone through bankruptcy in the past several years? Forward this info, it might help them realize that it's not impossible to get a new mortgage. Have questions on getting a mortgage after as significant credit event? Give me a call at 484-680-4852 or Ask an expert!
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