Short Sale Update - Good News From Fannie Mae

For those of you who have been following the trend of Tallahassee foreclosures and the bevy of short sales in Tallahassee, you will want to know that Fannie Mae has introduced several new and updated policies regarding bankruptcy, foreclosures, short sales, and principal residency conversion in a document titled Fannie Mae Announcement 08-16.

If you click on the link to the Fannie Mae Announcement 08-16, you will find the details on these changes. I have written this blog as a brief summary in an effort to point out a significant occurrence at Fannie Mae and what might be a huge market influencer in the next six months.

The biggest issue addressed in the Fannie Mae Announcement 08-16 is that Fannie Mae will finally establish a policy for short sales (or what they refer to as "preforeclosure sales"). Fannie Mae explained that a preforeclosure sale "involves the sale of the property by the borrower to a third party for less than the amount owed to satisfy the delinquent mortgage, as agreed to by the lender, investor, and mortgage insurer."

Fannie Mae Announcement 08-16 On Short Sales

So, now that they've defined it, what is all the big fuss about? Well, Fannie Mae has stated that "due to the increased incidence of preforeclosure sales, Fannie Mae is establishing a 2-year elapsed time period for reestablishing credit following completion of the action." I believe this means that families that must endure a short sale today will have their credit restored in only two years. This is a far better outcome than foreclosure, which has actually gotten worse!

If somebody goes through foreclosure, the old Fannie Mae policy required a 4-year time period from the date of the foreclosure sales was completed ("completion date") for reestablishing credit. Unfortunately, the Fannie Mae Announcement 08-16 changes this policy to a 5-year time period from the completion date.

So, as you can see, a family working through a certified short-sale company can put themselves in a position to restore their credit much quicker than if they allow their home to be foreclosed. I think this is very solid news from Fannie Mae and will help speed the recovery of the real estate market.

While this blog article has only scratched the surface of this very timely Fannie Mae announcement, you can download the full announcement by through the link to the Fannie Mae Announcement 08-16, where you will find the details on all of these changes.

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Joe Manausa is a real estate investor and the Broker and Co-Owner of Joe Manausa Real Estate. He can be reached via e-mail through the Tallahassee Real Estate Website or catch his latest writings on the Tallahassee Florida Real Estate Blog , or by calling (850) 386-2001.

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#1 By Joe Manausa at 7/11/2017 3:48 AM

Thanks for the additional info Dave. I did not read deep enough in the report to see the 680 credit requirement, but I suspect there will be other loan products for those borrowers who have seasoned the two years and are below that 680. Time will tell...

#2 By Dave at 7/11/2017 3:48 AM


Great post! I have been following this situation myself. Just to clarify, after the two years of "seasoning" for short sale, and five years for foreclosure, the buyer will be required to a have a 680 credit score to get a loan sale-able to FNMA.

thanks and keep up the great work!

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