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John Murphy's Trulia Blog

Real Estate Insight and Analysis for the Minneapolis Area

By John and Janet Murphy | Agent in Plymouth, MN

Fannie Mae Guidelines on Short Sales, Deed-in-Lieu and Foreclosures

Struggling home owners need to get their heads around the impact their housing financial crisis will have on their future ability to get a mortgage.

Fannie Mae is the 800 pound gorilla in the secondary mortgage market.  They drive everything.  They continue to stress the need for home owners to pursue other options besides foreclosure.  Basically, if you go all the way through foreclosure, it's likely going to take 7 years again to get a mortgage.  If you pursue a short sale or deed-in-lieu (DIL) you might be eligible 2 years after the completion of that action.  Bankruptcy is 4 years.  Click here for the most recent Fannie Mae guidelines.

It's worth noting that bankruptcy seems to have less impact than a foreclosure.  Many people end up pursuing bankruptcy at some point during the short sale process - not everyone, but many do.  Sometimes home owners will pursue bankruptcy after they get an approval from the bank, but they won't release the seller's obligation for the debt owed.  At that point, depending upon the seller's circumstances, and with competent legal advice, they may decide to have the debt discharged through bankruptcy.

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