Tuesday, April 20, 2010


Going forward, borrowers who previously experienced a deed-in-lieu of foreclosure won’t have to wait as long to get approved for a subsequent mortgage.

Last week, mortgage financier Fannie Mae changed its required waiting period (the amount of time that must elapse after a pre-foreclosure event) to reflect current market conditions.

In the past, borrowers had to wait four years after a deed-in-lieu of foreclosure to get approved for a mortgage with Fannie Mae.

That time period has been slashed to just two years, though the maximum loan-to-value is limited to 80 percent. After four years, the maximum LTV climbs to 90 percent.

Pre-foreclosure sales and short sales, which Fannie categorizes as the same event, a property sold in lieu of foreclosure for less than the total amount owed, will also have a two year waiting period with the same LTV requirements.

Additionally, certain extenuating circumstances will allow borrowers to get loans after just two years at up to 90 percent LTV.

In all cases, borrowers must re-establish their credit, meaning they must meet minimum credit score requirements and eligibility requirements.

Fannie Mae and Freddie Mac currently require a five-year waiting period after foreclosure to re-establish credit; the waiting period is only three years for an FHA loan and two years for a VA loan.

Any questions or concerns don’t hesitate to contact me, Gene Neal your Mortgage Expert.

Tel (631) 687-3510 Ext. 101

Fax (631) 687-3513