Fannie Mae Guideline Changes…the Good News

Saving mortgageA good friend and mortgage loan officer Aaron Alvarez at Alliance Home Loans sent me some good information about the changes that Fannie Mae instituted on August 16th, 2014. Here is what he had to say:

As many of you have probably already heard as of August 16, 2014 Fannie Mae will no longer offer an option for borrowers who are two years out of short sale with 20% down. These borrowers will have to wait four years but will only be required to put 5% down to qualify for a conventional mortgage. This short sale seasoning change was not the only change that Fannie Mae made this August. They now allow buyers who have had a foreclosure as a result of a bankruptcy to qualify according to the bankruptcy seasoning requirements of four years as opposed to the foreclosure seasoning requirements of seven years that they have had to wait up until this point. This is a huge change in the way lenders will view derogatory credit occurrences in your buyers past and will bring a large number of buyers back to the market three years sooner than they thought.

To make it simple if someone included a foreclosure in a bankruptcy and the BK paper shows that the property was surrendered in the BK, they are eligible for a conventional loan 4 years after the BK discharge date. The down payment would be as little as 5% down. That allows borrowers to finance up to $417,000 for a new home.

That last part is pretty important. While these changes seem complicated they are a great asset for consumers. If you have more questions please contact myself or Aaron Alvarez.

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