Fannie Mae has recently announced the waiting period requirements for borrowers who have has a previous deed-in-lieu of foreclosure or pre-foreclosure sale are being updated to now require a four-year waiting period; through a two-year waiting period will be permitted if the event was due to extenuating circumstances. The loan-to-value restrictions previously tied to different waiting period time-frames are also being removed.

This is good news for those conventional mortgage loan borrowers who do not have the 20% down payment and only have the 10% down payment on a home purchase. You no longer need a 10% down payment to qualify for a conventional mortgage load after the 4 year waiting period requirement. Fannie Mae will allow a home buyer to only put a 5% down payment on a home purchase to qualify for a conventional mortgage load 4 years after a short sale or deed in lieu of foreclosure.

Short Sale/Deed in Lieu of Foreclosure

(Changes for applications taken on August 16, 2014 or later)

 Waiting Periods Under the Old Guideline                                                                                                                         (On or before 8/15/2014)

• 7 years if the borrower puts <10% down (Recovery period must have elapsed prior to the date of the application.)
• 4 years of the borrower outs 10% down (Recovery period must have elapsed prior to the date of application.)
• 2 years if the borrower puts 20% down (Recovery period must have elapsed prior to the date of application.)

Waiting Periods Under the New Guideline                                                                                                                         (On or after 8/16/2014)

• 4 years from the date the deed to the property was transferred back to the servicer. No LTV/CLTV limitations.