Real Estate Trade Secrets

 Waiting periods and re- establishing credit after Serious Derogatory Events

Event                                    Waiting period                                                 Waiting Period with extenuating circumstances

Bankruptcy 7 or 11           4 years  from discharge                 2 years from discharge

Bankruptcy 13                   2 years from Discharge                  2 years from discharge

Multiple Bankruptcy      5 years                                                  3 years

Foreclosure                        7 years                                                  3 years up to 90%  max financing

Short Sale OR

Deed in Lieu                      7 years for max financing             2 years 90% max financing

                                                4 years for 90% financing

                                                2 years for 80% financing

Requirements for Re-establishing Credit

The borrower’s credit will be considered re-established if all of the following are met.

The loan receives recommendation from DU (designated underwriting system) that is acceptable for delivery to Fannie Mae or if manually underwritten, meets the minimum credit score requirements

The borrower has traditional credit re- established and (3) trade lines marked as agreed.

Extenuating Circumstances Defined

Non-recurring events that are beyond the borrower’s control that can be substantiated. Examples include divorce, medical emergencies, job layoff, etc.  The borrower must provide a letter explaining the relevance of supporting documentation, confirm the nature of the event that led to the bankruptcy or foreclosure action, and illustrate the borrower had no reasonable options other than to default on their financial obligations.