Fannie Mae announced this month that they are modifying the guidelines to obtaining a Conventional loan significant derogatory credit event, such as a foreclosure, preforeclosure sale (commonly known as a short sale), or deed-in-lieu (DIL) of foreclosure.
The new policy is for loan applications taken after August 16, 2014.
Previously, two (2) years after a preforeclosure sale, deed-in-lieu of foreclosure or the charge-off a mortgage account a borrower would be eligible for up to 80% financing. After four (4) years 90%. After seven (7) years 95%. With extenuating circumstances (such as a loss of job) a borrower would be eligible for 90% financing after just two years.
The new guidelines state that a borrower is eligible for 95% financing after four (4) years and two (2) years with extenuating circumstances. So they restore full loan-to-value eligibility after 4 years instead of 7.
This should help a lot of hopeful home buyers as we continue to come-out of the recession.