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Fannie Mae recently released a report revising the waiting periods for borrowers with a derogatory credit event such as a foreclosure, bankruptcy, short sale, or deed-in-lieu of foreclosure on their credit history to obtain a new loan. For borrowers with a short sale or deed-in-lieu of foreclosure on their record, Fannie Mae's new mandated minimum waiting period to become eligible for a new loan is four years. The time is shortened to two years if there are extenuating circumstances.
If a borrower has a foreclosure on his or her credit record, the new minimum waiting period is seven years. Under extenuating circumstances, that period is shortened to three years with some additional requirements for up to seven years. For those with a chapter 7 or 11 bankruptcy, the waiting period is now four years, or two years with extenuating circumstances. For borrowers with a chapter 13 bankruptcy, the required waiting period is now two years from the discharge date and four years from the dismissal date. If there are extenuating circumstances, the waiting time from the dismissal date is shortened to two years.
The House Judiciary Committee approved bipartisan legislation that is aimed at speeding up the bankruptcy process and preventing taxpayers from taking the hit in the event of the failure of large financial institutions. The law, known as H.R. 5421 or the Financial Institution Bankruptcy Act of 2014, was approved by a voice vote on Wednesday. Under the new law, a subchapter added to chapter 11 of the bankruptcy code requires large financial institutions to maintain transparency and creditor priority.
