My clients are always asking me why short sales for sellers in default of their mortgages are a better solution than foreclosure and deed-in-lieu-of foreclosure. My response is that it will be less damaging to your credit and you will be able to recover faster than if you have a foreclosure listed on your credit. I did not know exactly how much faster, though.
Fannie Mae has just introduced their most recent guidelines for new mortgage loans which address individuals with various types of foreclosure history.
Potential borrowers with a foreclosure on their credit record must wait 5 years to be considered for new funding, and are subject to additional credit and down payment requirements for 5 to 7 years.
Deed-in-lieu-of-foreclosures requires 4 year wait with additional requirements for 4 to 7 years.
Short Sales require only a two year wait with no additional requirements.
These new guidelines make short sales a much better option for homeowners, as well as provide realtors with a great opportunity to assist distressed homeowners with a short sale AND future home ownership.
The clients you help save now, could be your future buyers in 2 years. Providing these clients with assistance for credit repair though a lender or reputable source, could enable these clients to move forward and be homeowners, again. Life moves on!
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