Talking Points
- Some former homeowners who lost their houses to foreclosure or sold their homes via short sales are beginning to wade back into the housing market. However, some credit concerns due to these events are causing concern for would-be home buyers.
- The road back to homeownership won’t be easy. Traditional lenders that follow Fannie Mae guidelines may not approve a loan after a foreclosure until at least seven years have passed.
- However, if a buyer can prove the foreclosure resulted from extenuating circumstances that are unlikely to recur, such as a divorce, catastrophic illness, or a layoff, the time period may be reduced to as little as three years.
- Another option is to work with a lender who does not sell its mortgages to Fannie Mae. The waiting period may be less, but the borrower likely will pay above-market interest rates and be asked for a larger down payment.