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Pretty Soon There Won’t Be Anybody Left to Buy Homes

Reblogger Cliff Kavanaugh
Real Estate Agent with Keller Williams Realty of Charlottesville Virginia

Original content by Judy Chapman

Fannie Mae came out with new underwriting guidelines for borrowers who have a history of pre-foreclosure, deed-in-lieu foreclosure, and short sales.

The guidelines make it easier for some to get financing on a new home ... but more difficult for others.



Those who previously went through a ‘deed-in-lieu foreclosure’ ... i.e., turned in the keys of their house before the bank could officially foreclose ... have it easier by being able to buy a new home in as little as 2 years. Before, they would have had to wait 4-7 years.

Pre-Foreclosure Sale

It looks like there’s no change for pre-foreclosure sales, i.e., those who were able to avoid final judgment by selling first. Two years before and 2 years now.


Short Sale

The biggest punishment comes for those who did a Short Sale without ever defaulting on their loans. Before, there was no waiting period to qualify for a new purchase per se, though most lenders had been reluctant to approve new loans. Now ‘Short Sellers’ must wait at least 2 years, no exceptions.


Many, though, have also been stating that those who have gone through a Foreclosure with a capital ‘F’ can also purchase in as little as 2 years. This isn’t true.

It’s important to delineate between the words ‘pre-foreclosure’ and ‘foreclosure’.

  • ‘Pre-foreclosure’ means before the foreclosure or final judgment has happened.
  • ‘Foreclosure’ means the house has been taken by the bank and title has transferred.

As you’ll see in the Fannie Mae Announcement, only a ‘pre-foreclosure sale’ is addressed.

  • A pre-foreclosure sale is one in which the homeowner defaulted and foreclosure proceedings had been initiated ... but a successful Short Sale stopped final foreclosure.
  • A Short Sale, it would appear, is a short sale in which the homeowner has not defaulted.

Confused yet? So are we all!

Since these new guidelines do not address Foreclosure with a capital ‘F’, former homeowners must still wait at least 5-7 years before they can purchase a new home.

I think it’s sad, though, that homeowners who have borrowed and scraped and gone into debt to keep those foreclosure papers from being served are being lumped together with homeowners who defaulted. The distinction is a fine line but a valid one.

Adding to the woes of ‘pure’ Short Sellers is Fannie Mae’s requirement that they must be in default at least 30 days before the Short Sale can be approved. Doesn’t this punish the homeowner who is just trying to do the right thing? And doesn’t this deplete the available number of homebuyers ... homebuyers that the real estate market desperately needs for a recovery?

With 3 million homes predicted to be foreclosed this year ... and maybe next year ... and  maybe into 2012, at the end of this long road, there won’t be any homebuyers left.

 *  *  *  *

JUDY CHAPMAN | “Your House ... Your Future ... My Job”






Oviedo · Winter Springs · Winter Park · Maitland

Baldwin Park · Lake Nona

Downtown Orlando · East Orlando 


Ask the Queen of Short Sales about ...

The #1 Way to Avoid Foreclosure

or "How to Sell Your House in an Upside-Down Market"




Coldwell Banker Residential | 521 E Mitchell Hammock Rd | Oviedo FL 32765 | Judy@OrlandoHouseSales.com | (407) 227-7763           

© 2007-2010 www.activerain.com/blogs/OrlandoforSale by Judy Chapman ALL RIGHTS RESERVED. Portions of this content may be used with attribution.

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Best wishes, Clifford Kavanaugh, Associate Broker
Founder of Keller Williams Realty of Charlottesville
Keller Williams International Achievement Medalist
Certified Short Sale Consultant
EcoBroker Energy Advantage Graduate

View Charlottesville Area Homes for Sale at: www.CvilleHomeSearch.com  

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Kate Bourland
Marketing with Kate - Redding, CA
Onlilne Marketing Mobile Marketing

This is ridiculous.  Another instance where those governing the rules are clueless.   Makes perfect sense - let's punish the consumer for the mess that the financial sector created. 

Truthfully, I didn't think that shortsales even got approved if people were current.  The world is upside down.  Thanks for sharing.

Jun 02, 2010 07:52 PM
Olympus Executive Realty Inc.
Olympus Executive Realty INC. - Orlando, FL
Home Of The Top Producers

YIKES This can be a scarey thing!

Jun 02, 2010 08:26 PM
Patrick White
Home Driven Realty, Inc - Baldwin, NY
Driven to bring New Yorkers home

Hi Cliff,

Thanks for the update on changes to Fannie Mae standards.

Jun 02, 2010 08:52 PM
Daniel J. Brudnok, REALTOR
Berkshire Hathaway Home Services Fox & Roach, REALTORS - Exton - PA License #RS-225179-L / Delaware License #RS-0025038 - Downingtown, PA


Changes are all around us in our Industry, I was told change can be good......not sure if this is the case here.

Jun 25, 2010 04:14 AM