Many people are now losing their loans . . . . .

In the days before the great times, actually 60 days ago, if the borrower had a short sale over 2 years ago AND has 20% down payment then the borrower is eligible for a new Conventional loan without having to document an extenuating circumstance. Now the new rule is more restrictive and no longer allows borrower’s to obtain financing after 2 years unless an extenuating circumstance can be completely documented (regardless of down payment). In an extenuating circumstance cannot be documented (as defined by Fannie Mae’s rules of what is “extenuating”) then the borrower must now wait 4 years to obtain financing.

The new rule says that the borrower must wait 7 years now after a foreclosure unless they can  document extenuating circumstances.

The Waiting Period for Mortgage Debt Discharged through Bankruptcy is effective immediately. The Waiting Period after a Preforeclosure Sale or Deed-in-Lieu of Foreclosure and Charge Off Accounts – Mortgage Debt changes are effective for mortgage loans with applications dated on and after August 16, 2014

The waiting period requirements for borrowers who have had a previous deed-in-lieu of foreclosure or preforeclosure sale are being updated to now require a four-year waiting period; though a two-year waiting period will be permitted if the event was due to extenuating circumstances and the loan complies with all requirements specific to a deed-in-lieu of foreclosure or a preforeclosure sale due to extenuating circumstances.

For loan applications taken on or after August 16, 2014, the lender must document that the deed-in-lieu of foreclosure was completed four or more years from the disbursement date of the new loan, or two or more years from the disbursement date of the new loan when the lender confirms that the mortgage loan meets the applicable timeframes and eligibility requirements for a deed-in-lieu of foreclosure due to extenuating circumstances, in order for the loan to be eligible for delivery to Fannie Mae. For loan applications taken before August 16, 2014, the lender must document that the event was completed two or more years from the disbursement date of the new loan, and that the loan complies with all other requirements specific to a deed-in-lieu of foreclosure specified in the Selling Guide in order for the loan to be eligible for delivery to Fannie Mae. If the account was subject to a foreclosure, the foreclosure must have been completed seven or more years from the disbursement date of the new loan.

Waiting Period for Mortgage Debt Discharged through Bankruptcy

The Selling Guide has been updated to indicate that if a mortgage debt has been discharged through bankruptcy, even if a foreclosure action is subsequently completed to reclaim the property in satisfaction of the debt, the borrower is held to the bankruptcy waiting periods and not the foreclosure waiting period. Lenders must obtain documentation to verify that the mortgage debt in question was in fact discharged as part of the bankruptcy.

Waiting Period after a Preforeclosure Sale or Deed-in-Lieu of Foreclosure

The current requirements that apply to waiting periods following a preforeclosure sale (short sale) or deed-in-lieu of foreclosure provide for different waiting periods of 2 years or 4 years and set out different maximum loan-to-value ratios (LTV) for those timeframes. These requirements are being updated to remove the LTV restrictions tied to different waiting periods, and establish a standard 4 year waiting period, with a 2 year waiting period permitted if a borrower has extenuating circumstances.

So, if you have been waiting for a short sale and already have submitted your pre-approval before the Aug change, you should probably have that updated. Many people are now losing their loans due to this current change.

Paul Antonelli Broker / Owner  ANTONELLI  REALTY Orlando, FL 321-443-4028 info@PaulAntonelli.com

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