Tag Archives: Fannie Mae

Foreclosures in the neighborhood

While walking this morning I noticed the house two doors down had a notice on the door: This home is owned by Fannie Mae.

I know, it’s all over these days. I’m sure many of you have had a neighbor lose their home recently, also. It’s sad. He and his family have lived there since 2004. This house is very cute and was cared for and loved by my neighbor. It was built in 1938 and has been thoroughly remodeled and the landscaping updated.

Like so many others though, he’s not losing his home because he bought more house than he could afford – living there for seven years is a testament to that – but because due to the economy he is earning much less than he even last year and he can no longer afford to pay his bills.

And he’s not becoming a renter. He, his wife and kids are all moving-in with other family and sharing expenses.

I guess I’m from a different school of thought about this recession. I am not from the school of  “real estate and mortgage fraud brought down the country”. I’m from the school of thought of “Yeah, there was some fraud in the real estate industry, but the biggest cause of the bubble burst was the economy already being on a downward spiral causing loss of jobs which lead to people losing their homes and cars and other things.”

I feel my position is supported by the fact that it wasn’t only the mortgage industry that saw late payments and defaults. All sectors of the credit industry did: homes, autos, credit cards, etc.

Why did this happen? Well I’m no economist, but I can guarantee that the people really responsible for the mess we’re in have shifted the blame to those without the money and the microphone and are walking away scott-free and richer than they were in 2007.

Fannie Mae Announces 3.5% Buyer Assistance on REO Properties

By Carrie Bay, DSNews.com – Fannie Mae announced Monday that borrowers purchasing a Fannie Mae-owned property through HomePath, the GSE’s REO disposition operation, will receive up to 3.5 percent in closing cost assistance. The company has implemented this temporary buyer assistance program fairly regularly since the beginning of last year — a strategy aimed at helping the GSE unload a bloated supply of repossessed homes. Fannie Mae acquired 262,078 single-family REO properties through foreclosure in 2010, compared with 145,617 in 2009. Read more below.

Foreclosure, bankruptcy and short sale guidelines for buying a new home

I’ve get asked (all to often) what the guidelines are for buying a new home after a short sale, foreclosure or bankruptcy, so here is a quick reference guide:

Conventional Loans

Derogatory Event Waiting Period Requirements Waiting Period with Extenuating Circumstances
Bankruptcy – Chapter 7 or 11 4 years 2 years
Bankruptcy — Chapter 13 • 2 years from discharge date

• 4 years from dismissal dat

• 2 years from discharge date

• 2 years from dismissal date

Multiple Bankruptcy Filings 5 years if more than one filing within the past 7 years 3 years from the most recent discharge or dismissal date
Foreclosure 7 years 3 years Additional requirements after 3 years up to 7 years:

• 90% maximum LTV ratios

• Purchase, principal residence

• Limited cash-out refinance, all occupancy types

Deed-in-Lieu of Foreclosure and Preforeclosure Sale • 2 years — 80% maximum LTV ratios

• 4 years — 90% maximum LTV ratios

• 7 years — LTV ratios per the Eligibility Matrix

2 years — 90% maximum LTV ratios

FHA Insured Loans

Chapter 7 Bankruptcy:

  • Two (2) years since discharge and good credit has been reestablished.
  • Bankruptcies less than two (2) years (but not less than 1 year) may be allowed provided the reason for the bankruptcy was due to extenuating circumstances.
  • A borrower whose bankruptcy has been discharged less than one (1) year is not eligible except for non-credit qualifying Streamline Refinances when the loan has been reaffirmed in the bankruptcy.

Chapter 13 Bankruptcy:

Borrower is eligible for an FHA loan one (1) year from when the payout period began period provided all payments to the bankruptcy trustee have been made in a satisfactory manner and the borrower receives court approval to enter into the new mortgage transaction.

Consumer Credit Counseling:

Participation in a consumer credit counseling payment program does not disqualify a borrower from obtaining an FHA-insured mortgage provided that one (1) year of the pay-out period has elapsed under the plan and the borrower’s payment performance has been satisfactory (i.e., all required payments made on time). In addition, the borrower must receive written permission from the counseling agency to enter into the mortgage transaction.

Foreclosure:

Borrowers are not eligible for a new FHA mortgage if they pursued a short sale agreement on his or her principal residence simply to

  • take advantage of declining market conditions, and
  • purchase, at a reduced price, a similar or superior property within a reasonable commuting distance.

Borrowers are considered eligible for a new FHA-insured mortgage if

  • they were current on their mortgage and other installment debts at the time of the short sale of their previously owned property, and
  • the proceeds from the short sale serve as payment in full.

Borrowers in default on their mortgage at the time of the short sale (or pre-foreclosure sale) are generally not eligible for a new FHA-insured mortgage for three years from the date of the pre-foreclosure sale.

VA Guaranteed Loans

Chapter 7 Bankruptcy:

If the borrower or the borrower’s spouse has had a Chapter 7 bankruptcy, they are not eligible for a VA loan for two (2) years from the date of discharge, not the date of filing.

Chapter 13 Bankruptcy:

Borrower is eligible for an VA loan one (1) year from when the payout period began period provided all payments to the bankruptcy trustee have been made in a satisfactory manner and the borrower receives court approval to enter into the new mortgage transaction.

Foreclosure:

A borrower may not be eligible for a VA guaranteed loan for two (2) years after foreclosure or deed-in-lieu of foreclosure. If the foreclosure was on a VA guaranteed mortgage the borrower may not be eligible for full entitlement for a new loan.

Collections and Judgments:

If a collection is minor in nature it usually does not need to be paid off, however judgments must be paid in full prior to closing. A borrower is not eligible for a VA loan if they are delinquent on any federal debt such as tax liens, student loans, etc. If payment arrangements are made that would bring the borrower up to date they may be considered for VA loan approval.

Consumer Credit Counseling:

Participation in a consumer credit counseling payment program does not disqualify a borrower from obtaining a VA guaranteed mortgage provided that one (1) year of the pay-out period has elapsed under the plan and the borrower’s payment performance has been satisfactory (i.e., all required payments made on time). In addition, the borrower must receive written permission from the counseling agency to enter into the mortgage transaction.

Just had a short sale? Want to buy a new home? You may be in luck.

So you’ve had to short sale your home. You’re worried the short sale will prevent you from buying a home again. Well, you may be in luck. Using an FHA insured loan you may be eligible to buy a home the very next day. Here is what HUD has to say about short sales and buying again:

…borrowers are considered eligible for a new FHA-insured mortgage if: 1) they were current on their previous mortgage and other debts at the time of the short sale and 2) if the proceeds from the short sale serve as payment in full.

We also stated that borrowers are not eligible for a new FHA mortgage if they pursued a short sale agreement to take advantage of declining market conditions, or to purchase another property at a reduced price.

Additionally, borrowers who execute a short sale while in default on their mortgage are not eligible for a FHA-insured mortgage for three years from the date of the sale.

Lenders, however, can make exceptions if the default was due to circumstances beyond the borrower’s control, such as the death of the primary wage earner.

So as long as you were current on your former mortgage and other debt, and not in foreclosure, than you are immediately eligible for an FHA insured loan.