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In an effort to support overall market stability and reinforce the
importance of borrowers working with their servicers when they have
difficulty repaying
theirhttp://ping.fm/PdyMj

debt, Fannie Mae has updated
several policies regarding borrowers' future eligibility to obtain a new
mortgage loan after experiencing a pre-foreclosure event, including a
deed-in-lieu of foreclosure, pre-foreclosure sale, or short sale.

Under these new policies, Fannie Mae is changing the waiting period required
for a borrower to be eligible for a mortgage loan after a pre-foreclosure
event. The waiting period, which commences on the completion date of the
pre-foreclosure event, may now vary on the loan-to-value (LTV) ratio for the
transaction, occupancy of the property, and whether extenuating
circumstances played a part in the borrower's inability to pay his or her
mortgage.

Current waiting-period requirements are four years for a deed-in-lieu of
foreclosure, two years for a pre-foreclosure sale, and no policy currently
exists specific to short sales. But under the new guidelines, waiting
periods will be determined by LTV ratios, not the type of pre-foreclosure
event.

Borrowers with 80 percent maximum LTV ratios will be required to wait two
years to obtain a new mortgage, and

90 percent maximum LTV borrowers will have to wait four years. Borrowers
with LTV ratios higher than 90 percent may have to wait seven years.

The new policies also include waiting-period exceptions for borrowers with
extenuating circumstances. Borrowers with 90 percent maximum LTV ratios will
only have to wait two years before becoming eligible to obtain a new
mortgage if they can prove extenuating circumstances, such as loss of
employment, contributed to their financial hardship.

In addition, Fannie Mae is updating the requirements for determining that
borrowers have re-established their credit after a pre-foreclosure event.
Borrowers must meet three specific requirements before their credit will be
considered re-established:

* The waiting period and the related requirements must be met.
* The loan must receive a recommendation from Desktop Underwriter (DU)
that is acceptable for delivery to Fannie Mae or, if manually underwritten,
meets the minimum credit score requirements based on the parameters of the
loan and the established eligibility requirements.
* The borrower must have traditional credit as outlined in Fannie
Mae's Selling Guide. Nontraditional credit or "thin files" will not be
considered acceptable.

These policies are effective immediately. Fannie Mae's DU will be updated in
June to reflect the deed-in-lieu of foreclosure policy changes, but the new
policies for pre-foreclosure sales and short sales will not be included, as
they cannot be identified by DU at this time.

However, effective for loan application dates on or after July 1, 2010,
lenders will be required to determine during their review of the credit
report if there is a pre-foreclosure sale or short sale and must manually
apply the new policies to all loan case files underwritten through DU.

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