November 25, 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.


Call me if you have any questions.

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