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Short Sales Favored by Fannie Mae
Freddie and Fannie have been highlights of the news the last few days with the government's plan to "help" the agencies.
Be sure to not overlook announcement 08-16, dated June 25, 2008, by Fannie Mae. In this announcement new and clarified guidelines are given for how long people have to wait until they will be able to buy again after foreclosure, bankruptcy, deeds in lieu, and short sale. (Fannie Mae calls it a pre foreclosure sale, but explains it means a sale where less than what is owed is accepted.)
These guidelines will take place for actions dated August 1, 2008, and forward.
- Foreclosure: Meaning "went to auction" 5 years before can purchase. Then to purchase must have a minimum credit score of 680, and have 10% down. Also, cash out refinances are not allowed.
- Bankruptcy: Excluding chapter 13. Time before buying with Fannie Mae is 4 years after the discharge or dismissal date. (Not from filing date.) This time could be a total of 11 years.
- Chapter 13: Often called bankruptcy, but is a reorganization. The time frame until someone can buy using a Fannie Mae backed loan is 2 years after discharge, or 4 years after dismissal. Discharge is when the plan was successfully completed, and dismissal was when it wasn't completed but dismissed because time was up.
- Deed in lieu: This means giving the deed back to the lender instead of a foreclosure. The amount of time before a home purchase is 4 years from the date of executing the deed in lieu. Second homes, investment homes, etc. may be purchased with higher than 10% down. Also refinances, and cash out refinances are regulated closely.
- Short Sale: There is only a 2 year wait before being able to purchase another home. Also, there are no special restrictions or requirements about purchasing real estate after the wait time.
To read the full text of Announcement 08-16 click here.
This is valuable information for the homeowner facing foreclosure, as well as for the real estate investor. Fannie Mae is giving a strong message that having a short sale negotiated on behalf of the homeowner is by far the most favored way to go. This clarification will make it easier to explain to homeowners why they should have a short sale done instead of walking away.
If you are reading this, and need a short sale negotiated, I am experienced in doing this, and can help you no matter where you are in the U.S. If you are a homeowner, agent, or investor, I can negotiate your short sale at no cost to you. Just send me an email by clicking on the email me link in the left column.
For more about short sales, see these posts:Short Sales: Don't Let Your Dollars Walk Away!
Making a Short Sale Work
Short Sale Education
No! You Can't Buy the House BUT Gimme the Money!
Increase Your Income With Short Sales
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Thanks for the heads up!
Definitely gives us investors doing short sales something to use when negotiating with homeowners facing foreclosure.
Nice post!
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