Homeowners who have gone through a short sale or participated in a deed-in-lieu arrangement with their lenders may, beginning July 1, 2010,Â qualify Â for new mortgages under Fannie Mae programs in as little as two years from the recording Â of the short sale or deed-in-lieu arrangement. The current penalty period before recovery of credit is four years.
In order to qualify for the new loan after the two-year penalty period, the homeowner must:
In special circumstances, a homeowner may be able to qualify for a new loan after the two-year penalty period without a full 20% down payment if they can prove that their short sale or deed-in-lieu was due to a special circumstance such as:
However, as Fannie Mae is requiring homeowners seeking this shortened two-year penalty period to reestablish their good credit under a FICO-based scoring system, non-traditional credit â€” credit history which is not reported in FICO scores, such as rental, utility or cellphone bill payments â€” will be ignored, cutting out a significant portion of the good financial behavior most homeowners established after the financial trauma of a short sale or deed-in-lieu.