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*.
* 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.