For the past several years Freddie Mac has followed the same seasoning guidelines as FNMA for borrowers that have had past credit events such as foreclosure and bankruptcy. The longer waiting periods for buyers that had these issues meant FHA or private loans were really the only options for those wishing to re-enter the housing market, even if their situation had otherwise stabilized. This week Freddie announced a reduction in the wating period times for these potential buyers. It's important because even though in most cases FHA interest rates are lower the high cost of FHA mortgage insurance tends to make the loans more expensive, even with the rates having been reduced in January.
The bottom line is there are now more financing avenues open for those that were impacted by the recession. Here are the NEW Freddie seasoning requirements:
Foreclosure: 7 years now 3 years from the completion date
Bankruptcy: 4 years now 2 years from the discharge date
Deed in Lieu: 7 years now 2 years from the completion date
Short Sale: Still 4 years or 2 years with extenuating circumstances.
In the case of all of the above events the buyer is eligible for 90% conventional financing with the shorter waiting periods. If a buyer is utilizing a 5% down payment program the 7 year waiting period is still in effect.
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