What about those former ‘homeowners’ who suffered a hardship – when will they be able to get a mortgage again?

How long do you have to wait before being eligble for a new Fannie Mae mortgage?

If the borrower has ‘extenuating circumstances’, then these time periods apply:

Deed-in-lieu = 2 years

Short sales = 2 years

Foreclosure = 3 years

Bankruptcy = 4 years (2 years if ch. 13)


Fannie Mae describes “extenuating circumstances” as follows:

Extenuating circumstances are nonrecurring events that are beyond the borrower’s control that result in a sudden, significant, and prolonged reduction in income or a catastrophic increase in financial obligations.

If a borrower claims that derogatory information is the result of extenuating circumstances, the lender must substantiate the borrower’s claim. Examples of documentation that can be used to support extenuating circumstances include documents that confirm the event (such as a copy of a divorce decree, medical bills, notice of job layoff, job severance papers, etc.) and documents that illustrate factors that contributed to the borrower’s inability to resolve the problems that resulted from the event (such as a copy of insurance papers or claim settlements, listing agreements, lease agreements, tax returns (covering the periods prior to, during, and after a loss of employment), etc.).

The lender must obtain a letter from the borrower explaining the relevance of the documentation. The letter must support the claims of extenuating circumstances, confirm the nature of the event that led to the bankruptcy or foreclosure-related action, and illustrate the borrower had no reasonable options other than to default on their financial obligations.

As long as the borrower can write the letter, and provide some evidence that illustrate that there were no other reasonable options but to default, then they qualify for the shorter time frames!


Fannie Mae underwriting guidelines requirements of borrowers in this category:

A. Minimum 10% down payment

B. Minimum 680 FICO score (not required after foreclosure)

C. Full-doc qualifying

Here is a summary of the Fannie guidelines, and a good dissertation on FICO scoring at the end:

CAR summary of credit timelines

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Jim the Realtor
Jim is a long-time local realtor who comments daily here on his blog, bubbleinfo.com which began in September, 2005. Stick around!

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