The commonly held understanding about foreclosures, short sales and bankruptcies was that they would very severely impact a persons’ credit. A person who had a foreclosure on his record might have to wait as much as seven years before he would be eligible for new financing.
I suspect that the current foreclosure situation changes all that. After all, when the number of people in trouble becomes large enough the effect is the same as if none were in trouble. If everyone had credit problems, the banks would quickly change their policies to stay in business.
In a April 14 bulletin to lenders Fannie Mae announced a new policy changing the required waiting period for a borrower to be eligible for a mortgage loan after a preforeclosure event.
Fannie Mae is changing the required waiting period for a borrower to be eligible for a mortgage loan after a preforeclosure event. The waiting period commences on the completion date of the preforeclosure event, and may vary based on the maximum allowable LTV, CLTV, and HCLTV ratios (referred to herein as LTV ratios) and occupancy of the property. These new policies will be updated in the Selling Guide, B3-5.3-07, Derogatory Credit Information, and in B3-5.3-10, DU Credit Report Analysis. The following table describes the waiting period policy changes:
I was not able to include the above mentioned table. It would not keep its’ formatting.
To see original bulletin: https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2010/sel1005.pdf