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Fannie Mae last week announced it is updating several policies impacting the future eligibility of borrowers to obtain a new mortgage loan after experiencing a preforeclosure event, including a preforeclosure sale, short sale, or deed-in-lieu of foreclosure.
Among the changes is the amount of time that must elapse after the preforeclosure event before a borrower is eligible to obtain a new mortgage loan owned or guaranteed by Fannie Mae. This waiting period may be dependent on the loan-to-value ratio of the transaction and whether extenuating circumstances, such as loss of employment, contributed to the borrower’s financial hardship. Additionally, Fannie Mae is updating the requirements for determining that borrowers have re-established their credit after a significant derogatory credit event. These changes apply only to loans owned or guaranteed by Fannie Mae and do not impact those owned or guaranteed by Freddie Mac or the Federal Housing Administration (FHA).