There is Good News for Some Foreclosure Victims from Fannie and Freddie
There is good news for some foreclosure victims. It will benefit those who have handed over their deed to the bank because of money problems or those who have resorted to short sale so as to skip foreclosure. They may not now have to hang around for the usual four or five years to again qualify for financing to purchase another house. Instead the waiting has been brought down to two years.
Fannie Mae in a note to lenders dated 14th April said that it is climbing down from its previous stand that disallowed applicants for housing loans who have taken part in short sale or deed in lieu of foreclosure from getting a new loan for a long stretch of time. The new guidelines will come into effect from 1st July. Those borrowers who have opted for short sale as under the HAMP plan of the Obama government would also be eligible for a fresh mortgage within two years.
The officials of Fannie Mae did not talk about the reasons behind these alterations. The bulletin stated that the company is hopeful that by these steps the troubled borrowers would be helped in future.
The fine print of the new rules are worthy of notice. To be eligible for a fresh loan a minimum gap of two years has to be there and the loan takers would have to pay at least 20% as down payment. If the amount they collect for down payment is 10% then the waiting period would be as before – four years. But if the amount they can scrape together is less than 10% then the waiting period could be much longer.
On the other hand if the loan applicants could prove that their mortgage related problems were directly because of “extenuating circumstances” like loss of job, illness or divorce, they would be eligible for new loans with a minimum down payment of 10% within only two years.
The other mortgage giant Fannie Mae has also come up with proposals that are only slightly different regarding mandated waiting period following short sale or deed-in-lieu of foreclosure. For those who cannot prove these unavoidable circumstances that lead to the earlier financial distress Freddie Mac will not be able to give the green signal to new mortgages before another four years. For those borrowers who suffered foreclosure because of their own bungling of finances – the stipulated waiting period of five years remains in force.
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There is Good News for Some Foreclosure Victims from Fannie and Freddie
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