How Long Do I Have to Wait to Get a New Loan After a Pre-Foreclosure Sale or Deed-in Lieu of foreclosure? (from Fannie Mae Announcement SEL-2010-05)

Fannie Mae is updating several policies regarding the future eligibility of borrowers to obtain a new mortgage loan after experiencing a preforeclosure event (preforeclosure sale, short sale, or deed-in-lieu of foreclosure). The "waiting period" - the amount of time that must elapse after the preforeclosure event - is changing and may be dependent on the LTV ratio for the transaction and whether extenuating circumstances contributed to the borrower's financial hardship (for example, loss of employment). In addition, Fannie Mae is updating the requirements for determining that borrowers have re-established their credit after a significant derogatory credit event.

Note: The terms "short sale" and "preforeclosure sale" are both referenced in this Announcement and have the same meaning - the sale of a property in lieu of a foreclosure, resulting in a payoff of less than the total amount owed, which was pre-approved by the servicer.

 Fannie Mae is changing the required waiting period for a borrower to be eligible for a mortgage loan after a preforeclosure event. The waiting period commences on the completion date of the preforeclosure event, and may vary based on the maximum allowable LTV, CLTV, and HCLTV ratios (referred to herein as LTV ratios) and occupancy of the property. These new policies will be updated in the Selling Guide, B3-5.3-07, Derogatory Credit Information, and in B3-5.3-10, DU Credit Report Analysis. The following table describes the waiting period policy changes

New Waiting Period Requirements (1)  <>

2 years - 90% maximum LTV ratios <>