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)
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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!
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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:
So I can buy a house beyond my means. Never make a payment. Live in the property for 6 months to a year. File chpt 13. Then buy a house again in 2 years?
I see more incentive to buy a house save, never make a payment, and rent for 2 years after chpt 13 then rent and save.
What a country free money for everybody.
Free Obama Cheese for all.
Have a glass of Kool Aid. It tastes so good….
Hey Shadash, I told you things wouldn’t change 😀
No wonder everyone is walking away.They have turned home ownership into a casino.
If I were a bank, I would say screw the rules and not give a loan to somebody with a foreclosure, or at least charge them insanely high interest rates. Nothing stops them from covering their own fannie with stricter rules than Fannie requires.
Uh, don’t try to rent from me with a foreclosure on your record…
Bloomberg is reporting that extending and expanding the federal house purchase credit is all but a done deal. Tack at least another year onto remaining a renter. *sigh*
BTW, it looks like they will extend the credit to “move up buyers” who owned their current house for at least five years. Open the fraud flood gates.
“Uh, don’t try to rent from me with a foreclosure on your record…”
Couldn’t agree more. Amazing how it’s actually harder to rent after foreclosure than buy another house. You’d almost think renting is more attractive than buying!
Oh, wait . . . it is.
The link works only if you can log into the CA Assn of Realtors. Can I get the info someplace else?
Thanks
Sorry um…
Here is the link to Fannie’s announcement:
https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2008/0816.pdf
And I’ll add the CAR brief as a addendum under the post where the link was.
So… another housing boom beginning three years from now.
At that rate, the people who got walked away at the start of this mess will be able to buy the REOs of the people who tried to make it for a few years before succumbing.
Shakin’ my head…
I just read the Bloomberg update on the house purchase tax credit and it looks like the latest version reduces the credit to $7,290 but extends it to “step-up” buyers as well (those who have owned their current home at least 5 years).
http://www.bloomberg.com/apps/news?pid=20601206&sid=aE4U2k3Pf5oo
Jim,
These rules will be changed by Fannie on the 1st of the year to make the timeframe 4 years for short sale, deed in lieu (good luck they would rather have someone else sell it short), Foreclosure and BK. FHA is still at 2 years for BK chapter 7 or 13 as long as new credit has been established.
I have seen a few of the buy and fly types from early 2007 6 months behind today and ready to drop their second nightmare on the market.
‘those who have owned their current home at least 5 years’
Not sure all the details on this part are out yet, but it’ll be curious to see whether or not you have to sell your home to qualify.
With the new anti-buy-and-bail regulations, it would seem one would have to sell first. Only most people can’t sell…
‘I have seen a few of the buy and fly types from early 2007 6 months behind today and ready to drop their second nightmare on the market.’
I live here in Fresno and I know a couple of people who lost their homes in late 2007. Now before they were foreclosed on by the bank they purchased a new home. One of the families is now facing foreclosure for a second time in three years.
They have not made a payment since March of this year according to what they told me last week. They said the bank will not approve a loan modification so they will walk away.
The cycle continues again….
Well, 10% is whole lot better than the 3.5% FHA one…
@Nathan.. Thats exactly it. Before the Buy and Bail alarm went off Fannie Mae was doing loans and the mortgage insurance insurance companies were issuing policys for 95% LTV with income waivers. These were full dock loans with no income verification (stated full doc) so the same deadbeats that bailed and got the house up the street for 10% less than they owed are now going to bail again because they are upside down again. Hopefully all of this garbage will work through the market in the next year or so, just in time for the 5yr I/O fallout to hit. I hope so at least because we need the inventory.
I am about to lose my home to foreclosure. I had the place for 7 years without a missed or late payment. My husband’s company downsized and we missed one payment (shouldn’t have but the idiot was minding the mortgage payments and spaced that month’s payment). He then obtained a forbearance without telling me. In the meantime, our mortgage company went belly up and another, shady, company took over it. The forbearance was met. Shady lender then said we overlooked a fee of some $200.00 and wouldn’t accept our mortgage payments for five months. Our mortgage payments sat in the bank, intact, while we fought and fought with this lender to take them. They then claimed we were in arrears and tacked on some $6,000.00 worth of bogus fees I am not going to pay, period. They have decided to foreclose. I could go to court and fight this there, but why fight for a house that a neighbor has all but destroyed with his leaking sewer that the city, mayor’s office or anyone else won’t do anything about? They want this stinking cesspool with the structural damages, cracked foundation and raw sewage from that neighbors sewer haunting our basement, they can have it.
As for nobody renting to me? I swallowed a little humble pie and contacted my former landlord who is more than happy to rent to me despite the foreclosure. Fact is I rented for 30 years, never missed a payment, was never late, was never evicted from an apartment and left their places cleaner and better than I found them. Not everybody’s story is the same.