New Rules Might Have Impact on Foreclosures By State Statistics- By: John Cutts
Fannie Mae’s move to change some of the rules governing home mortgage loan applications might have some significant effects on foreclosures by state statistics. The mortgage institution has recently stated that it will be relaxing rules that prevent loan applicants from qualifying for another loan after a certain period of time.
According to Fannie Mae, homeowners who have been involved in short sale transactions in an effort to prevent foreclosure will be allowed to acquire a new mortgage to finance a second home for as short a time as two years following the short sale, as opposed to the original time frame of four-five years.
The company has revealed that the decision aims to encourage homeowners to find financing solutions to avoid foreclosures. The changes, which will take effect on July 1, 2010, are also expected to somewhat lower the number of bank owned foreclosed houses.
Those who will qualify under the modified rules are homeowners who were involved in short sales instead of distressed homes for sale transactions. However, they also need to raise a down payment of at least twenty percent to qualify for the two-year period wherein they will be allowed to get a second loan.
These provisions are expected to affect foreclosures by state statistics in a way that homeowners will likely opt for a short sale instead of foreclosure in the hope that they will get a second shot at having their own home within two years.
The mortgage company also added that homeowners who can only raise a down payment of ten percent will have to wait for a minimum of four years before they can acquire another financing assistance.
However, those borrowers whose loan payment problems are mainly due to uncontrollable circumstances, such as medical expenses and job loss, may be allowed to get another loan within two years despite providing a down payment of only ten percent.
In reaction to the announcement, some market analysts have speculated that it will be difficult for a lot of homeowners who have bank owned foreclosed houses to qualify under the mortgage company’s new rules since they will likely have insufficient credit histories.
Real estate analysts are not yet sure whether the new rules by Fannie Mae will help owners who have had problems with foreclosures in the past, but they do believe that the development will have some impact on foreclosures by state statistics.
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John Cutts has been educated in the finer points of the foreclosure market over 5 years.