September 23, 2017

Urgent! Fannie Mae & Freddie Mac No longer be accepting short sales under 4 years!!!

To my friends, clients, real estate agents and referral partners. This is Important : If you know anyone trying to buy a home with “conventional financing” who is less than 4 full years out of a short sale closing, see the bulletin below.
On August 16th, Fannie Mae & Freddie Mac (essentially all conventional financing) are changing their requirements for essentially all new mortgages, loan modifications, and second mortgages. This change will restrict approval of borrowers who have had a short-sale within the last 4 years! They are also removing the Loan to Value (LTV) accommodations that some lenders (including us) currently offer (i.e. 80% LTV can buy in 2 years). They will now require 4 years between your short sale and a new mortgage, no matter what the LTV ratio.
The only exceptions will be if we can document extreme extenuating circumstances – loss of job may not be extenuating enough. Basically, divorce, death, serious medical condition requiring leaving the work force are the only extenuating circumstances we have seen approved by Fannie/Freddie. So call me to evaluate your circumstances, or get your purchase contract signed today!.
If you want to buy a home, it has been less than 4 years since your short sale, and you cannot prove extenuating circumstances, you need to be in a purchase contract BEFORE AUGUST 16th!!!
Otherwise, the only option is an FHA loan, which requires 3 years out without extenuating circumstances. Just like the conventional loans, proving the extenuating circumstance for FHA can be difficult. The FHA “Back to Work” option has not been a successful program to use. FHA refused to insure almost all of those we tried to send that didn’t fit into a perfect box.
So buyer beware – Literally!
Basically after August 16th, with few exceptions, it will be 3 years for FHA, 4 years for Conventional and 2 years for VA. There are some other out of the box options but they aren’t as appealing as conventional rates and terms.

Here is FANNIE’s PRESS RELEASE

Call me if you have any questions.

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