Nevada City Virtual Tour

Monday, December 31, 2012

Loan modifications on primary residence now being treated as short sellers by Fannie Mae?

 
Just when it seems sanity is returning to the lending industry this gets dropped on us.
 
 
Homeowners receiving loan modifications for their primary residence (and noted on their credit report); are now being treated as short sellers by Fannie Mae…even if the homeowner was never late on their mortgage.

In other words: A responsible homeowner, who made their payments on time and received a loan mod for their primary residence will now have to wait three (at least) years before they can purchase their NEXT home (or refi their current residence).

The only exception to the rule: If a homeowner received a loan modification on an “investment property/second home” may receive financing on another property (primary residence only) on a case by case basis (underwriter’s discretion) within 2 years.

Here are the Fannie rules:

o Refinance transactions: On previously modified loans…refinancing is not permitted.

o New purchase transactions: When a borrower’s current residence (previous loan) was modified AND the property is being retained as a 2nd home/investment property…financing for another home…will NOT be permitted.

o New purchase transactions: ..When a borrower’s previous loan was modified AND the property is being sold…the borrowers loan application …should be treated with caution and reviewed for delinquencies and short payoffs.

o New purchases of 2nd home or investment properties: When a borrower’s current residence (owner occupied) has been granted a loan modification… financing for the next home will not be NOT permitted.
 
o Refinances where another property (not the subject property) has a loan modification should be reviewed with "caution" to ensure that there was no short refinance (treated as a short sale).

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