San Jose California Short-Sale versus Foreclosure

How will a San Jose California Short-Sale or Foreclosure affect a San Jose homeowner?

The following Fannie Mae guidelines provide helpful information:

Foreclosure
A five-year period is required to re-establish credit, measured from the completion date of the foreclosure action as reported on the credit report or other foreclosure documents provided by the borrower. Additional requirements apply after five years, up to seven years, following the completion date:
• The purchase of a principal residence is permitted with a minimum 10% down payment and minimum representative credit score of 680.
• The purchase of a second home or investment property is not permitted.
• Limited cash-out refinances are permitted for all occupancy types pursuant to the eligibility requirements in effect at that time.
• Cash-out refinances are not permitted for any occupancy type.

Exceptions for Extenuating Circumstances
A three-year period is required to re-establish credit, measured from the completion date of the foreclosure action. The additional requirements listed above apply after three years and up to seven years following the completion date, except the minimum credit score of 680 is not required.

Deed in Lieu of Foreclosure
A four-year period is required to re-establish credit, measured from the completion date (the date the deed-in-lieu was executed). Additional requirements that apply after four years and up to seven years following the completion date:
• The borrower may purchase a property secured by a principal residence, second home, or investment property with the greater of 10% minimum down payment or the minimum down payment required for the transaction.
• Limited cash-out and cash-out refinance transactions secured by a principal residence, second home, or investment property are permitted pursuant to the eligibility requirements in effect at that time.

Exceptions for Extenuating Circumstances
A two-year period is required to re-establish credit, measured from the completion date. The additional requirements listed above apply after two years and up to seven years following the completion date.

Preforeclosure Sale (a.k.a. Short Sale, at least in cases where a Short Sale is being done to avoid foreclosure…not sure how you’d establish that it wasn’t, so possibly all Short Sales may fall into this category.)
A two-year period is required to re-establish credit, measured from the completion date.

It’s important that a San Jose home buyer and San Jose home seller work with an experienced San Jose Real Estate agent who understands San Jose Real Estate Market Trends and statistics. Knowledge is power and the key to making informed San Jose Ca home buying and San Jose Ca home selling decisions.

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