On August 16, 2014 Fannie Mae revised their guidelines to reflect the waiting periods defined for people with a "prior derogatory credit event", i.e. a Bankruptcy, Foreclosure, Short Sale or Deed in Lieu of Foreclosure. The reason they did this you ask? Banks don't make money if they don't lend it...
With millions of Americans affected by the housing bust between 2007-2013 the pool of potential borrowers to which banks can lend is severely capped. What's a bank to do?? They changed the guidelines to open the gates a little bit and keep the profits flowing. there's a fairly good chance that lending to someone who had stellar credit except for a blip at some time which caused a major financial disruption, probably will payoff again. That's who the banks are targeting with these revised guidelines. Might YOU fit the bill?
Here are the new guidelines from the horse's mouth: Fannie Mae Fact sheet: Prior Derogatory Credit Event - Borrower Eligibility
Previously, a Short Sale or Deed in Lieu of Foreclosure would have yielded a wait of 2 years from the transfer of ownership to obtain a new FHA loan (capped loan limits to purchase with 3.5% down) or Conventional loan (min. 20% down) or 4 years to purchase with 10% down with s Conventional loan.
Today, the new guidelines are 4 years for either the short sale or deed in lieu with a lowered 5% down payment on a Conventional loan. BUT if you can prove extenuating circumstances due to a major life event, that wait is cut to 2 years!
These waiting periods vary depending on the type of bankruptcy (7, 11, 13 or multiple BKs) and are 7 years for foreclosures, but again with "extenuating circumstances" these periods can be cut down by years. Take a look, and call me or a your lender to see if/how you may be affected by this changing legislation.
Starting in 2008 if you look at the adjacent chart from the Cromford Report, there were nearly 2,000 trustee's sales in Maricopa County, per month! At the peak in 2010, that number skyrocketed to over 5,000 trustees sales, per month and by the end of 2012, was still over 1,300 per month! I'm not aware of any area in The Valley of the Sun, Scottsdale, Phoenix, Tempe, Chandler, Gilbert, etc. that dodged the real estate bust so that leaves a whole lot of borrowers who will be newly eligible fairly quickly, if not already.
I can refer you to good lenders to look at your situation if you do not have someone upon which you can rely for sound info. At the end of the day, this info is the difference between continuing to re-establishing your credit and rebuilding equity and wealth via home-ownership instead of paying off someone else's mortgage!
I'm here to help! Have a great day!
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