Wausau Real Estate - Time Frame For Getting Loan After Prior Foreclosure

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Underwriting Borrowers with a Prior Foreclosure

A variety of foreclosure alternatives are available to borrowers who are having difficulty making

their mortgage payments. In Announcement SEL-2010-05, Underwriting Borrowers with a Prior, Fannie Mae announced changes to the

Preforeclosure Sale or Deed-in-Lieu of Foreclosure

policies regarding the amount of time that must elapse after a borrower experiences a

preforeclosure event (preforeclosure sale, short sale, and deed-in-lieu of foreclosure). The

changes highlighted the importance of borrowers working with their servicers to avoid


As a follow-up to that Announcement, Fannie Mae is now modifying the waiting period that must

elapse before a borrower is eligible for a new mortgage loan after a foreclosure. The

combination of the waiting period policies for foreclosures and preforeclosure events continue to

favor borrowers who work with their servicers to avoid foreclosure by allowing these borrowers

to be eligible for a future Fannie Mae loan in a shorter period of time.

This Announcement describes the policy changes in detail. The changes will be reflected in the

Selling Guide,

B3-5.3-07, Significant Derogatory Credit Events - Waiting Periods and Reestablishing

Credit, when it is updated on June 30, 2010.   

Waiting Period After a Foreclosure


Currently, the waiting period that must elapse after a borrower experiences a foreclosure is

seven years. However, Fannie Mae allows a shorter time period - five years - if certain

additional requirements are met (e.g., minimum down payment and credit score, and occupancy

requirements). These requirements are being modified to remove the five year option. Unless

the foreclosure was the result of documented extenuating circumstances, which only requires a

three-year waiting period (with additional requirements), all borrowers will now be required to

meet a seven-year waiting period after a prior foreclosure to be eligible for a new mortgage loan

eligible for sale to Fannie Mae.

The additional requirements that apply to borrowers with documented extenuating

circumstances are also being updated to reflect a maximum LTV ratio of the lesser of 90% or

the LTV ratio per the Eligibility Matrix for all transactions.

The following table describes the waiting period policy changes for foreclosures   5 years



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