Fannie Mae Extenuation Circumstances with 20% down

[Ntothemystic]

Ok, I just read this the other day:

"On July 29th, 2014 Fannie Mae made an unprecedented move to loosen up qualifying guidelines for borrowers that included mortgage debt in a bankruptcy by removing the waiting period for any foreclosure that occurred after the mortgage debt was discharged through a bankruptcy."

I have spoken to a person at Fannie Mae, and confirmed this is real. Just like the FHA Back to Work program, it is contingent on extenuating circumstances, and I am pretty sure you have to be able to put 20% down. However, FHA say only loss of job or reduction in job income counts, not loss of rental income. Two of our foreclosed properties were former homes turned rentals. The fact both homes were unrented, a total of $2100/month in mortgages, caused our bankruptcy.

I guess I just don't get it. The IRS requires me to report rental income and pay taxes on it, like, I don't know, a JOB? If a 20% loss of job income is supposed to be acceptable circumstance for FHA, and you have a 100% loss of rental income for an extended period, that seems to me to be the very definition of extenuating circumstances.

The difference with the Fannie Mae program (which doesn't have a cutesy name yet, but I think I am going to call it the "Yes, America, We Screwed You Over Big Time With Our Shenanigans, Sooo Sorry" program) is that it is up to each individual bank to determine what type of income they allow for extenuating circumstances. Has anyone else heard of this or know any bank to try first?

[dspii]

I have been researching this as well, the following is directly from Fannie website. Basically if you can prove that the mortgage was included in BK, your good 4 years after discharge.....2 years with extenuating circumstances.

"If a mortgage debt was discharged through a bankruptcy, the bankruptcy waiting periods may be applied if the lender obtains the appropriate documentation to verify that the mortgage obligation was discharged in the bankruptcy. Otherwise, the greater of the applicable bankruptcy or foreclosure waiting periods must be applied."

Now, reading thru some blogs, it appears that the question of how a discharged mortgage is treated if you have a DIL or SS instead of an FC. Apparently it is treated the same in that if your mortgage was included and discharged in BK, you must wait the 4 years from discharge to be eligible for a FNMA loan. This is great news for me, I short sold 1 1/2 years after my BK and have been patiently waiting to get out of the penalty box for an FHA loan that I will be eligible for in November 2014.

We shall see and I'll report back what I find out.....

Oh, here's the link to the page

https://www.fanniemae.com/content/guide/selling/b3/5.3/07.html