Bankruptcy

Fannie Mae Guidelines Update: No new mortgages for 7 YEARS after foreclosure

Fannie Mae has recently introduced new guidelines for mortgage underwriting, and is getting tougher on those who have experienced a prior foreclosure.

The time that must have elapsed after a foreclosure is up to 7 years from the previous 5. The changes highlight the importance of borrowers working with their servicers to avoid foreclosure and pursue other workout solutions, including short sales. 

Fannie Mae Waiting Period Requirements as of 10/1/2010

BANKRUPTCY Chapter 7 or 11: 4 years

BANKRUPTCY Chapter 13: 2 years from discharge date or 4 years from dismissal date

FORECLOSURE: 7 years

DEED IN LIEU OF FORECLOSURE, PREFORECLOSURE SALE, SHORT SALE:

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What happens to my house in bankruptcy?

I often hear folks touting bankruptcy as an answer to a foreclosure. This is simply not always accurate. Bankruptcy is a solution to debt issues. However, if you are hoping to save your home, filing bankruptcy will not in fact help you keep your home. A bankruptcy will only TEMPORARILY halt collection efforts from your lender, and will remove your personal responsibility to this debt. However you will inevitably have to repay the amounts owed, work out a repayment plan, modify the loan, or your home will end up in foreclosure anyway. Even once your responsibility to pay is eliminated, the lender can still collect their collateral - your home.

On the reverse side (and I actually hear more…