Foreclosure
and Short Sale Q & A
Q1. How long is the time period after a foreclosure before a consumer can be eligible to obtain credit to purchase a home?
A. Five years from the date the foreclosure sale was completed.
Additional requirements apply after 5 years and up to 7 years call for more information.
Q2. How long is the time period after a deed-in lieu of foreclosure before a consumer can be eligible to obtain a credit to purchase a property?
A. Four years from the date the deed-in-lieu was executed.
Additional requirements apply after 4 years and up to 7 years call for more information.
Q3. How long is the time period after a “pre-foreclosure sale” before a consumer can be eligible to obtain credit to purchase a property?
A. Two years from the completion date. NO exceptions are permitted to the 2-years period due to extenuation circumstances. (Source: FNMA Announcement 08-16, 6-25-08.0)
Q4.What is a “pre-foreclosure sale” and is that the same as a short sale?
A. “ A pre-foreclosure sale involves the sale of the property by the borrower to a third party for less than the amount owed to satisfy the delinquent mortgage, as agreed to by the lender, investor, and mortgage insurer”
(Source: FNMA Announcement 08-16, 6-25-08)
Although the terms pre-foreclosure sale and short sale have been used interchangeably, there is a significant difference for purposes of obtaining credit. For Fannie Mae purposes, a pre-foreclosure assumes that the borrower has been delinquent in paying his or her mortgage and the lender agrees to accept a lesser amount to avoid the time and expense of a foreclosure action. A short sale, however, can also refer to situations in which the lender of the mortgage agrees to a payoff of a lesser amount than is actually owed, even on a current mortgage, to facilitate the sale of the property to a third party. (Source: FNMA Announcement 08-16 Q&A, 8-13-08)
Q1. How long is the time period after a foreclosure before a consumer can be eligible to obtain credit to purchase a home?
A. Five years from the date the foreclosure sale was completed.
Additional requirements apply after 5 years and up to 7 years call for more information.
Q2. How long is the time period after a deed-in lieu of foreclosure before a consumer can be eligible to obtain a credit to purchase a property?
A. Four years from the date the deed-in-lieu was executed.
Additional requirements apply after 4 years and up to 7 years call for more information.
Q3. How long is the time period after a “pre-foreclosure sale” before a consumer can be eligible to obtain credit to purchase a property?
A. Two years from the completion date. NO exceptions are permitted to the 2-years period due to extenuation circumstances. (Source: FNMA Announcement 08-16, 6-25-08.0)
Q4.What is a “pre-foreclosure sale” and is that the same as a short sale?
A. “ A pre-foreclosure sale involves the sale of the property by the borrower to a third party for less than the amount owed to satisfy the delinquent mortgage, as agreed to by the lender, investor, and mortgage insurer”
(Source: FNMA Announcement 08-16, 6-25-08)
Although the terms pre-foreclosure sale and short sale have been used interchangeably, there is a significant difference for purposes of obtaining credit. For Fannie Mae purposes, a pre-foreclosure assumes that the borrower has been delinquent in paying his or her mortgage and the lender agrees to accept a lesser amount to avoid the time and expense of a foreclosure action. A short sale, however, can also refer to situations in which the lender of the mortgage agrees to a payoff of a lesser amount than is actually owed, even on a current mortgage, to facilitate the sale of the property to a third party. (Source: FNMA Announcement 08-16 Q&A, 8-13-08)
