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Buying a new home after a short sale

Fast-forward to the future and you want to buy another home. Times are better and you still believe in the investment opportunities of real estate. But you sold a home in 2009 in a short sale… Can you get a new loan?

Well, the rules have changed some… FANNIE MAE has changed the “waiting period” timeline before home buyers can qualify for a new loan after a ‘preforeclosure event,’ namely a deed in lieu or a short sale.

The terms “short sale” and “preforeclosure sale” have the same meaning in the Fannie Mae Announcement, namely, the sale of a property in lieu of foreclosure that has been pre-approved by the mortgage servicer resulting in a payoff amount less than the total amount owed by the borrower . Factors that will impact these changes include the required down payment or loan to value (LTV) for the transaction, and whether extenuating circumstances contributed to the individual’s prior financial hardship situation (e.g. job loss).

The new waiting periods for borrowers who have given a deed in lieu of foreclosure or are involved in a short sale or preforeclosure sale are:

  • 2 years – 80% maximum LTV ratios
  • 4 years – 90% maximum LTV ratios
  • 7 years – LTV ratios per the Eligibility Matrix

Click here for  Fannie Mae Guidelines Jul10.