New Fannie Mae and Freddie Mac short sale guidelines went into effect today. Here are the key points.
- If a loan is 90 days delinquent and the borrower’s FICO score is below 620, then no financial documentation will be required to support the short sale. This is what we like to call a “no doc” short sale.
- If the borrower’s debt to income ratio is greater than 55 percent, the borrower does not have to be delinquent in loan payments.
- If a borrower has more than $10,000 in cash reserves or 6 months in mortgage payments, there will be a request for a cash contribution for 20 percent of the reserves. This may be negotiated down. Cash reserves are everything except retirement and pensions. Stocks, bonds and CDs are all considered cash reserves.
These new guidelines should make the outcome of short sales which meet these criteria less of a guessing game.