Fannie Mae has announced a new updated. This time they are revising the waiting period for Deed-in-Lieu of foreclosure and Short Sale on conventional conforming loans effective with applications dated on or after July 1, 2010. Fannie Mae's Automated Underwriting System (DU) will be updated to version 8.1 and implemented during the weekend of June 19, 2010 to include these changes. No changes will be made to bankruptcies or strict foreclosure, so the present guidelines will continue to apply.
Below is a breakdown and time periods for the new changes.
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Info about the author:
George Souto is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com
George! This seems like such a LONG wait... is this typical? (appreciate the info though)
Diane the wait for foreclosures are even longer, 5 years before you can do a conventional loan again. FHA is three years, and FHA have not come out with guidelines on Short Sales yet.
George,
Thank you for keeping us up to date.
Ann Hayden in Wildwood, MO
George,
Deed in lieu is a good alternative, if the bank approves! It's not as simple as just walking away! If you don't negotiate it, you could find yourself in foreclosure for a house you already gave back. Not to mention libel for the enviable deficiency.
Your post shows that any positive attempt at resolution is easier on one's credit than foreclosure.
Bill
George,
Fannie is easing up on the waiting periods which is good. My suggestion is that if a buyer puts down say 50%, he shouldn't have to wait at all. The risk is minimal in that case.
George, not a good scenario in any case, but I agree with William that positive steps toward resolution is better than foreclosure.
George as usual I appreciate you bringing to our attention changes that affect our business.
Ann you are welcome
Bill it is better but this change closes that gap and reduces the advantage. But I guess any advantage is better than non.
Esko that would make sense, but it does not make a difference to them right now, even though it should.
Nick, your right but it seems that Fannie Mae is not giving it much weight with this change.
Jennifer, thank you, and I will try to stay on top of all that is going on and blog about it.
I saw this news the other day George. It is good information to have at your finger tips.
Well, this will answer a lot of questions of agents and consumers, asked and yet to be asked.
The only thing missing here is that the bank must agree to accept the deed in lieu of.
Looks to me like what Fannie Mae has done is shortened the time period for a DIL but bumped up the LTV, and left the time period alone for a short sale without extentuating circumstances but bumped up that LTV as well. That's not very good news, actually.
Thank you for the good information, I made a copy of it and can pass it along, With the changing times we are in it helps to have good information to pass on in a difficult time. Thank you
Great information. I have several clients wanting to do a deed in lieu, but the bank is making them try a short sale first.
Great information. I have several clients wanting to do a deed in lieu, but the bank is making them try a short sale first.
Thanks for the information!! I am going to reblog.
So, I guess that short sales and deed-in-lieu have a similar impact on your future ability to borrow, right? George: do you have the link to this official information? It would be helpful for sharing with borrowers. Thanks
George thanks so much for posting this information. I would also like to have a link to the source info. Thanks, Bill
Will include in my SS listing presentation. Thank you George!
Wow, that's definitely letting up on guidelines. This is good news!
Hi George:
Great information...
Definitely deserves to be re-blogged.
Ahh, for us poor Canadians that sounds like dutch to us, BTW Is Fannie Mae your Aunt? LOL....so sorry George its Sunday morning and we are a bit brain drained. We hope this helps the issues you are facing down there. July 1st for us up here kicks off an increase in tax so we certainly have our issues here. All the Best.
It would also be nice to see the foreclosure bit of it as well. There is increasing pressure/diaglogue from lenders and attorneys that there's basically no difference between a short sale and a foreclosure when you're late on your payments.
Do they define LTV? Loan-to-Value.
Let's say our buyer has an $80,000 contract on a house that appraises for $100,000....they are only going to lend 80%/90% on the $80,000 CONTRACT price, right? Even though the property has 20% equity built in.
Good information.I too would like to see the chart on foreclosures. You make it so simple.
Thanks
Thanks for sharing this important information!!!
Thanks so much for such good information for us to be able to stay informed.
George- Very good to get the truth out there. We should add a disclaimer that Fannie can change the rules as they go.:) Also, as of right now, FHA is allowing short sale sellers to buy right after short sale if their short sale is for a job relocation and if they were late only to satisfy their lender's requirement to be late in order to do their short sale.
Of course, we have already seen many of our sellers get loans right after their short sale when they were not late on mortgage payments. There is no place on their credit report to say the sale of their home was a short sale. The credit reports we have seen, say paid in full, account closed. No mention of short sale so how would a new lender even know by examining credit if they did a short or not? Katerina
Great info, thanks!
Michael Collins - Broker - Rock Realty
www.RockRealtyWI.com
That's for the post. I will copy and the chart and send to my people just the same. Thanks!
George, this is an excellent chart and will be extremely helpful as buyers enter the market again down the road...after cleaning up their credit issues. P.S. the chart was slightly fuzzy or I need glasses, I initially thought it said "Dead in lieu of foreclosure" but I guess that would solve your credit issues?
If you have a second mortgage they will not do a deed in lieu.
Thank you very much George for sharing this. You staying on top of things and sharing it with us will only make us better. LOVE ACTIVERAIN. Great post.
Great information and thanks for sharing this useful information.
George, I see you've gotten back in the game. Good to see you again. And, such valuable info...your absence hasn't diminished your knack for providing essential facts for agents and consumers alike.
George,
thanks for this very useful informaton. I came from Katerina's reblog. i guess we need to send it to all our Short sale sellers, who have succefully completed the short sale
Bill I wanted to get it out quickly so that it did not catch anyone by surprise when it happens.
Lenn, that is a good addition to this post, and they also have to accept the Short Sale, it is not an automatic thing.
Elizabeth, they have had a waiting time for Deed in Lieu of Foreclosure for a while, but it is new for Short Sales. Short Sales are not even a question on the 1003, so it is not something that will be easy to pick-up on initially.
Jane I hope that this proves useful to you.
Kay, I am sure that most banks would prefer that, banks don't want to own properties.
Ritu, thank you for helping to get the word out.
Melissa, this was information that was shared with us this week from one of our Vice Presidents, and it is information that she receives, so I don't know of a website for you to go to.
Bill like I responded to Melissa I don't have a website, because this was internal information, but I can try to see if one exists.
Lisa, glad I could be of help.
Marney, well it is actually tightening up on the guidelines, and it is a first for Short Sales.
Toula, thank you I appreciate that.
Al and Peggy, yes and she is married to Uncle Freddy Mac ......... LOL
Dean & Sonia, there is no difference when it comes to being late on a mortgage, a late is a late, but there is a difference on the length of time between when you will be able to purchase again. For a foreclosure it is 5 years.
Shannon & Keith, the LTV is Loan-To-Value and the LTV is based on the Sales Price not the Appraised Value, so you are correct.
Glenn I will see about doing about putting a chart together for foreclosures and posting it.
Stephen your welcome.
Diane, I am glad that you found this information useful.
Nestor & Katrina, from what I have been told the Credit Bureaus are going to start putting a new code into the Credit Reports to indicate a Short Sale. The problem is that DU does not recognize the code yet, but will very soon. In the mean time Underwriters are looking at all past mortgages reported on the Credit Report for that code.
Michael you are welcome
Raine, it is nice to see others making good use of the chart.
Steve ............. LOL "Dead" instead of Deed would be appropriate in this case :)
Joe thank you for the added info.
Lanre, the reason why ActiveRain is such a great site is because we all share with one another. ActiveRain is a great place to stay on top of what is going on in our Industry.
Duane, you are welcome
William, I am not fully back yet, but am starting to get there. Thank you for the kind words.
Jon, it would give them a heads up and help to avoid them getting surprised by this down the road.
Nice Chart. TYVM!
George, I found this link, but it's not as definitive as what you posted. Still it's an indication of where we are.
http://www.housingpredictor.com/fannie-mae.html
Hate to say it, but I agree with Bill. not that i disagree with Bill, but five years has been the norm for several years. We always tell people with foreclosures....five years to get a new mortgage...but they never listen....
So, Fannie Mae sees Deed in Lieu in same light as short sales. This is important for people to know.
Thanks for the information George. Good to know. Would love to see a comprehensive chart of all the players.
Nick, thank you. I am sure that others will find additional info on this to be helpful.
Don 5 years is the time frame for a Conventional Mortgage, but if they are able to go FHA they are still only requiring 3 years. By the way Bill is always a good man to listen to :)
Christina, it seems to be a moving target these days, but for right now that is the way they are looking at it.
Gabe, I will try to post one on conventional foreclosures and bankruptcy's like some have asked for, and then I will see about posting one for FHA.
George--this is helpful information and consistent with what I have telling my clients who are willing to just walk away. Acting with honor almost always is better than quitting. This scenario rewards the people who have shown some character.
Hi George,
What I like most is having clarity. Now we all have the same information and can share it with our clients. Has there ever been a time when so many are in need of guidance in these matters?
George, as usual, you teach us well.
George, just printed out your chart to keep in my package of stuff I use to present all the alternatives to short sale prospects. Thank much, sir!
thanks for the information and chart.
You are always providing great info to us. I am amazed at the time frames on some things.
George, thanks for the latest information. This will be helpful in counseling sessions with sellers who are underwater.
Good information and I am going to reblog this for my clients. Thank you very much.
What does Fannie Mae consider "extenuating circumstances" in regard to the short sale?
Eloise, I am sure that there probably has been other times like this, but recent years have brought about more changes than I can recall in the past.
Kent, I am glad that you will be making good use of the information, and good luck with it.
Cindy your welcome
Judi, these are areas that people should not take lightly when they are making their decisions.
Kathryn, homeowners underwater need all the information that they can get to make the best decision that they can, and I am glad that I could provide a little bit of it.
Gene, thank you for getting the word out there.
Damon the was the last point on the chart "2 years from completion date and a Max of 90 LTV".
Does this chart mean it's easier and faster to get a loan after deed-in-lieu than it is after a short sale?
If this is the case then why would anyone want to go through the hassle of a short-sale? Hand the home back to the bank and walk away. I know someone who did this, but I don't know if the bank made him try to do a short-sale first. Also, are there any tax implications for a deed in-lieu of foreclosure over a short sale? When does the IRS consider foregiveness of a loan to be a taxable event?
Thanks, George, this is really valuable information. Makes me wonder if we'll have enough buyers for homes in the next few years with all these folks who can't get mortgages for a while.
Dave they are about the same, but most often the Credit Report recognizes the Deed-In-Lieu of Foreclosure as a foreclosure, se it tends to create more headaches.
Gail, I don't know of a bank making a homeowner go through a short sale, and if the homeowner just walks away from the property without going through the steps of doing a Deed-In-Lieu of Foreclosure, then the bank will foreclose. As far as your other questions, they would be best answered by an Accountant, I would just be guessing if I tried to answer them, and I try very hard not to guess.
George,
Congrats on the gold star!!
Ann Hayden in Wildwood, MO
George.. This is good information and what we need to keep our clients informed. Now it is just a matter of how long will it take the bank to get back to us.
Valerie, well as we both know that could be a loooooooooong wait.
Very informative post. Thanks for sharing the info. I love staying up to date on anything related to short sales.
An informative blog post that I enjoyed reading! Thank you for sharing!