SHORT SALE CONSEQUENCES VS. FORECLOSURE

It’s no secret that many borrowers are underwater in their primary residences and investment properties.  More often than not the investment properties are in a negative cash-flow situation and homeowners feel stuck in their primary residence knowing that it will take years to get “right-side up” in their house.

This article will be a four part series examining the consequences of a short sale versus a foreclosure and is designed to answer common questions real estate professionals face in these unique times.

FANNIE MAE LOAN ELIGIBILITY

A foreclosure will make a borrower ineligible for a Fannie Mae Mortgage for 5 years on a primary residence.  A homeowner who closes a short sale will be eligible for a Fannie Mae mortgage in 2 years.

An investor who allows a property to go through foreclosure is ineligible for a Fannie Mae non-owner occupied mortgage for 7 years. A short sale will prohibit an investor from a Fannie Mae mortgage on an investment property for 2 years. (Source- Northpoint Escrow & Title)

The rest of this short sales series will cover consequences to your credit score, deficiencies and employment impacts- so stay tuned!