What are Fannie Mae and Freddie Mac Guidelines on Home Mortgages?

This Article Is On Fannie Mae And Freddie Mac Foreclosure Guidelines On Home Mortgages

Fannie Mae And Freddie Mac Foreclosure Guidelines On Conventional Loans:

Borrowers can qualify for conventional loans after foreclosure, deed in lieu of foreclosure, short sale. However, there are mandatory waiting period requirements after a housing event to qualify for a conventional loan. The waiting period requirements after a foreclosure, deed in lieu of foreclosure, short sale is set by Fannie Mae and Freddie Mac.

Fannie Mae and Freddie Mac are the two mortgage giants in the United States. The roles of both Fannie Mae and Freddie Mac is to provide market liquidity in the mortgage markets. How does Fannie/Freddie provide liquidity in the mortgage markets?  They do so by being the two largest purchasers of mortgages by lenders. Lenders originate and fund loans using their warehouse line of credit. After the loans are closed, lenders need to sell the loans they closed and funded on the secondary market. Most mortgage lenders will sell the loans they closed to a larger mortgage bankers. The larger mortgage banker will purchase the loan from the lender. The larger mortgage banker will retain the servicing of the loans they buy by the lender and give the funds for the loans they bought. The lender will pay the warehouse line with the proceeds of the loan they sold. Now since the warehouse line of credit is available, the lender is now fully liquid and originate more loans The larger mortgage banker will purchase more loans from smaller mortgage lenders and bundle them up and sell it to an aggregator like Fannie Mae and/or Freddie Mac. This is how Fannie Mae and Freddie Mac provide liquidity to the mortgage markets.

How Fannie Mae And Freddie Mac Provide Liquidity In The Mortgage Markets

How Fannie Mae And Freddie Mac Provide Liquidity In The Mortgage Markets

As mentioned in the earlier paragraph, one of the main roles of Fannie Mae and Freddie Mac is to provide liquidity in the mortgage markets. Fannie Mae and Freddie Mac are the two largest buyers of mortgages on the secondary market. However, Fannie Mae and Freddie Mac only purchase conforming loans. By conforming loans, the conventional loans they purchase need to conform to their agency mortgage guidelines. This includes the mandatory waiting period after foreclosure, deed in lieu of foreclosure, short sale. Because of Fannie Mae and Freddie Mac, mortgage lenders always have liquidity and can offer mortgages to borrowers at competitive rates. Fannie Mae and Freddie Mac are government sponsored enterprises (GSE). Fannie Mae and Freddie Mac will only buy conforming loans that conform to their agency guidelines. This is why conventional loans is often referred to as conforming loans. Borrowers can qualify for conventional loans after a housing event. Fannie Mae and Freddie Mac have specific agency mortgage guidelines on conforming loans after a housing event.

Fannie Mae And Freddie Mac Foreclosure Guidelines: Difference Between Foreclosure Versus Deed In Lieu And Short Sale

Fannie Mae and Freddie Mac differentiates housing events unlike government mortgages. FHA, VA, USDA will categorize and have the same waiting period after a housing event. The waiting period after foreclosure, short sale, deed in lieu of foreclosure is three years from the recorded date of the housing event on FHA and USDA loans. The waiting period after foreclosure, deed in lieu of foreclosure, short sale is two years on VA loans. However, per Fannie Mae and Freddie Mac Agency Mortgage Guidelines, the waiting period after foreclosure to qualify on a conventional loan is seven years from the recorded date of the housing event. If the borrower had a prior deed in lieu of foreclosure and/or short sale, the waiting period is four years from the date of the DIL and/or short sale to qualify for a conventional loan. The reduction of waiting period is significant on a short sale and deed in lieu of foreclosure versus a regular foreclosure on conventional loans.

Fannie Mae And Freddie Mac Waiting Period Guidelines On Mortgage Included In Bankruptcy

What are the waiting period guidelines for a bankrupt mortgage

Per Fannie Mae and Freddie Mac Agency Mortgage Guidelines, if a borrower had a prior mortgage included in bankruptcy, and the mortgage was not reaffirmed, there is a four year waiting period requirements after bankruptcy discharged date to qualify for a conventional loans.

  • You cannot have reaffirmed the mortgage
  • The mortgage gets discharged and the home eventually gets foreclosed, and/or deed in lieu of foreclosure, and/or short sale
  • The date of the housing event does not matter
  • As long as the mortgage was included in bankruptcy and the mortgage was not reaffirmed, the waiting period start date is four years from the discharged date of bankruptcy
  • This rule only applies on conventional loans and not government loans

Under HUD Agency Guidelines, if you had a mortgage included in bankruptcy without having the mortgage reaffirmed, the waiting is three years from the recorded date of the housing event to qualify for an FHA loan. The discharged date of bankruptcy does not matter.

Non-QM Mortgages One Day Out Of Foreclosure And Bankruptcy

Non-QM and alternative home mortgage programs are making a major comeback in today’s hot housing market. Non-QM mortgages one day out of foreclosure and bankruptcy is becoming more popular in today’s booming housing market. Now homebuyers who have reestablished themselves after foreclosure and/or bankruptcy can qualify for non-QM mortgages one day out of foreclosure and/or bankruptcy. 30% down payment on a home purchase is required. However, as the foreclosure and/or bankruptcy ages, the down payment requirement gets lower. For more information about the contents of this article and/or other mortgage-related questions, please contact us at Capital Lending Network, Inc. at  800-900-8569 or text us for a faster response. Or email us at capitallendingnetwork.com. The team at Capital Lending Network, Inc. is available 7 days a week, evenings, weekends, and holidays. Capital Lending Network, Inc. has a national reputation for not having any lender overlays on government and conventional loans. We have a reputation of being a one-stop mortgage shop due to having every non-QM and alternative mortgage program available in the market besides FHA, VA, USDA, and Conventional loans.


Gustan Cho is a senior mortgage expert and National Managing Director, providing direct-to-consumer advice at NEXA Mortgage LLC. We are a mortgage brokers licensed in multiple states. We are experts in FHA Loans, VA Loans, USDA Loans, Conventional Loans, FHA 203k Loans, Reverse Mortgages Jumbo Mortgages, Non-QM mortgages, Bank Statement Mortgage Loans for self employed borrowers, and alternative financing.

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