Friday, April 16th, 2010, 3:46 pm
Fannie Mae (FNM: 1.02 -0.97%) announced it is reducing the wait time for some borrowers between when they complete a short sale or deed-in-lieu of foreclosure transaction and when they can obtain a new mortgage.
Previously, a borrower was required to wait four years before getting a new mortgage, or two years if their home sold in a short sale. Under the new guidelines, a borrower that previously completed a deed-in-lieu of foreclosure transaction can get a new mortgage in two years, provided the borrower has a 20% down payment.
If the borrower has a 10% down payment, the wait period is still four years. In some extenuating circumstances, the wait period can be reduced to two years with a 10% down payment for deed-in-lieu of foreclosure, but not for short sales.
Fannie Mae’s Desktop Underwriter (DU) origination software will be updated in June to reflect the new deed-in-lieu of foreclosure policy, but not short sales, as the software cannot at this time determine whether a borrower participated in a short sale.
Originators are required to manually underwrite mortgages after the waiting period if the borrower previously completed a short sale. This new policy is effective for manually underwritten mortgage loans with application dates beginning July 1, 2010.
The policy changes come as Fannie Mae develops its deed for lease (D4L) plan. At Thursday’s Texas Mortgage Bankers Association (TMBA) servicing conference, Miguel Gutierrez, program’s director, outlined the initiative, where in exchange for a deed-in-lieu of foreclosure, the homeowner-turned-renter pays fair market rent to stay in their home for up to 12 months.
Fannie expects the program to get a boost from the Home Affordable Foreclosure Alternative (HAFA) program, which offers incentives to servicers and second lien holders to consummate deed-in-lieu transactions. Gutierrez said Fannie hopes its program will benefit from increased workouts incentivized by HAFA.
Write to Austin Kilgore.
So when you are thinking of doing that Short Sale and walking away from a Bad debt, a home that will take you several yrs to regain equity, Remember to Call Linda Wieczorek azhomes4u@gmail.com
Posted via web from Living in Phoenix-Real estate-Neighborhoods & Homes
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