Following is a chart based on Fannie Mae's new bankruptcy and foreclosure policies as of 08-2008. I will follow this up (in the next week or so) with part 2 of 2 which will contain a revised chart with the remaining policy changes.
The following table outlines Fannie Mae's current and new policies for manually underwritten loans related to the time period that must elapse before borrowers can demonstrate they have reestablished an acceptable credit history after the occurrence of the bankruptcy or foreclosure. The table also includes new "Additional requirements" that apply to foreclosures.
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|Action||Current Requirements||New Requirements|
|Bankruptcy (All Except Chapter 13)||4-year time period from discharge date.||The 4-year time period remains the same, but will now be applied from either the discharge or dismissal date of the bankruptcy action.|
|Chapter 13 Bankruptcy||2-year time period from discharge date.||
The time period for Chapter 13 bankruptcy actions is measured as
• 2 years from the discharge date,
• 4 years from the dismissal date.
|Exceptions for Extenuating Circumstances - All Bankruptcy Actions||2-year time period from discharge date. No expectation to the 2-year time period for Chapter 13 bankruptcy actions.||The 2-year time period will be measured from the bankruptcy discharge or dismissal date. No exceptions are permitted to the 2-year time period after a Chapter 13 discharge.|
|Multiple Bankruptcy Filings||No existing policy.||5-year time period from most recent dismissal or discharge date required for borrowers with more than one bankruptcy filing within the past 7 years.|
|Exceptions for Extenuating Circumstances - Multiple Bankruptcy Filings||No existing policy.||
3-year time period from the most recent discharge or dismissal date.
Note: The most recent bankruptcy filing must have been the result of extenuating circumstances.
|Foreclosure||4-year time period from the date the foreclosure sale was completed ("completion date")||
5-year time period from completion date.
Additional requirements that apply after 5 years up to 7 years follo9wing completion date:
• The purchase of a principal residence is permitted with a minimum 10 percent down payment and minimum representative credit score of 680.
• Purchase of a second home or investment property is not permitted.
• Limited cash-out refinances are permitted for all occupancy types pursuant to the eligibility requirements in effect at that time.
• Cash-out refinances are not permitted for any occupancy type.