Short sale seasoning requirements will change on August 16th, 2014. You might be thinking what does this mean exactly and how long do I have to wait before I can get a new mortgage after a short sale in San Diego?
Current seasoning periods for short sales under most conventional loan programs are:
- 7 years with less than 10% down payment.
- 4 years with between 10% – 19.99% down payment.
- 2 Years with 20% or more down payment.
This will change on August 16th, 2014. The new seasoning guidelines for conventional short sales are:
- 7 years with less than 10% down.
- 4 years with 10% down payment or more (A 2 year seasoning requirement is allowed if you can document extenuating circumstances that caused the short sale. A declining market is not considered a hardship).
So what does this mean? This means that if you sold San Diego real estate as a short sale recently, you have to wait 4 years before you can get a new mortgage if you managed to save 10% for a down payment or more. You will have to wait 7 years if you have less than a 10% down payment.
SEARCH SAN DIEGO REAL ESTATE LIKE A PRO!
Why the change from Fannie Mae? It lowers the overall risk to the mortgage portfolio’s Fannie Mae holds although the side effect will be less borrowers and buyers in the real estate market. The magnitude of this effect will soon be demonstrated.
Are there any alternative options to get around the 4 year or 7 year seasoning requirement? There will be many niche lenders and portfolio investors looking to cash in on this new restriction from Fannie Mae. There will be options but with additional risk to any investor comes higher cost and usually rates to the borrower. Whether or not the products will make sense will be decision that must be made on an individual and unique basis.
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