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Why Is a Short Sale Better Than Foreclosure?

Posted by Wendy Rulnick on June 10, 2009 at 10:20am in Short Sale Discussions
New Fannie Mae guidelines state a borrower who has done a "Short Sale" must only wait two years to re-establishing credit and be able to get a mortgage again. Deed-in-Lieu of Foreclosure: 4-year time period from completion date (date deed-in-lieu executed) Additional requirements that apply after 4 years up to 7 years following completion date: Borrower may purchase a property secured by a principal residence, second home, or investment property with the greater of 10 percent minimum down payment or the minimum down payment required for the transaction. Limited-cash-out and cash-out refinance transactions secured by a principal residence, second home, or investment property are permitted pursuant to the eligibility requirements in effect at that time. A foreclosure on credit has 5 to 7 year restrictions on borrowing with stipulations. This is just the tip of the iceberg.

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Tags: credit, deed-in-lieu, foreclosure, of, sales, short
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Replies

  • Wendy Rulnick December 15, 2009 at 3:29am
    Rhonda - Fannie Mae also says one may immediately get a new mortgage if they did not have a more than 60-day late and did not have to do a promissory note or did not get a deficiency judgment after the short sale. But, as Bryant says, these are just guidelines.

    Rhonda Mial said:
    Aren't the guidelines different for someone who did a short sale even though they were never late or missed any payments but they had a true hardship (serious medical illness)? I think the guidelines are regarding people who missed payments and/or were late 60 days or more on any payments, right?
  • Bryant Tutas December 15, 2009 at 1:34am
    Rhonda, There are many factors involved. If you went into the short sale with excellent credit and never missed a payment you may very well come out the other end intact.

    These are GUIDELINES. Guidelines are not set in stone.
  • R Mial December 15, 2009 at 12:02am
    Aren't the guidelines different for someone who did a short sale even though they were never late or missed any payments but they had a true hardship (serious medical illness)? I think the guidelines are regarding people who missed payments and/or were late 60 days or more on any payments, right?
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