Yes You Can Buy After a Short Sale

This news just arrived in my email from one of the students in my monthly class for marketing homes, "What Does the Buyer Want? 6 Keys to Selling", Max Boyle. Max is a lender with Primary Residential Mortgage (303-600-8248). This article that he sent shares good news for buyers who have lost a home through a short sale or a deed in lieu. As you know any of the distress sales hurts the seller's credit for a number of years. What you may not know is you can still purchase a home after a specified waiting period and after you get back on your feet and strong financially. Here's the scoop.


Great News for Buyers with a Short Sale!

New Eligibility Rules Announced From Fannie Mae!

There's great news from Fannie Mae for home buyers who have experienced a short sale or deed in lieu of foreclosure. To help the housing market's continued stability, Fannie Mae is changing the "waiting period" (i.e. the amount of time that must elapse after the preforeclosure or short sale event) before home buyers can qualify for a loan. Several factors will impact these changes, including the required down payment or loan to value (LTV) for the transaction and whether extenuating circumstances contributed to the individual's financial hardship (e.g. a job loss). Feel free to check out the full announcement by Fannie Mae. Here's the executive summary:
Waiting Period Requirements by Preclosure Event
Deed-in-Lieu of Foreclosure
OLD: 4 years, Additional requirements apply after 4 years up to 7 years
NEW: 2 years – 80% maximum LTV ratios
Preforeclosure Sale
OLD: 2 years
NEW: 4 years – 90% maximum LTV ratios
Short Sale
OLD: No policy currently exists specific to short sales
NEW: 7 years – LTV ratios per the Eligibility Matrix

If you've had extenuating circumstances that caused the loss of your home, the new waiting period is 2 years – 90% maximum LTV ratios for people who had a deed-in-lieu of foreclosure, preforeclosure sale, or a short sale.

Note that the terms 'short sale' and "preforeclosure sale' are both referenced in Fannie Mae’s 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.The bottom line: Buyers who have experienced a short sale or deed in lieu of foreclosure may be eligible for financing sooner than previously expected…especially if they have 20% to put down.