Orlando Mortgage Blog

Buying Again Just Two (2) Years After A Short Sale

July 24th, 2013 3:43 PM by BILL WILBANKS

Did you or someone you know "Short Sale or Pre-Foreclosure Sale" a property in the last few years? Unfortunately many folks found themselves in that position in the recent market downturn across the nation. But it doesn't have to be the end of your homeownership dreams.

I'd like to touch on the Fannie Mae conventional loan guidelines in effect at the time of this writing as they relate to prior Short Sales and Pre-Foreclosure Sales. These guidelines may help you as a road map on buying a home once again and the hurdles you will be expected to meet at a minimum today.

First, the underwriter will need to determine the cause as coming on due to Extenuating Circumstances* or your Financial Mismanagement*.

Extenuating Circumstances*:

  • You must have a minimum of 2 years from the completion date for the Short Sale/Pre-Foreclosure and a maximum 90% LTV.
  • Regardless, borrower(s) must have reestablished credit.

Financial Mismanagement**:

  • Evidence that each Borrower has a minimum Loan Score of 680.
  • Minimum 4 years from completion date of the Short Sale/Pre-Foreclosure sale and a maximum 90% LTV.
  • Regardless, Borrower(s) must have reestablished credit.

* An Extenuating Circumstance is a nonrecurring or isolated circumstance, or set of circumstances, that was beyond the borrower's control. These circumstances significantly reduced income and/or increased expenses and rendered the borrower unable to repay obligations as agreed, resulting in significant adverse or derogatory credit. The loan file must contain documentation confirming the event, such as a copy of the divorce decree, medical reports or bills, notice of job layoffs, etc. and documentation that led to the borrower's inability to resolve the problems. In addition, if the borrower's credit history includes any significant adverse or derogatory credit in the most recent two (2) years the borrower's credit reputation cannot be considered acceptable and there is no evidence that the borrower(s) had an unacceptable credit reputation prior to the problems. Additional requirements/documentation may be required.

**If we are unable to document extenuating circumstances, as detailed above, then it must be concluded that the problems were due to Financial Mismanagement.

As you can see above, there is a path back to home ownership even after a short sale today. Give me a call if I can assist you or someone you know further in this matter.

Bill Wilbanks 

Posted in:General
Posted by BILL WILBANKS on July 24th, 2013 3:43 PM


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