As a general rule of thumb, you can expect to be without any credit to speak of for about two years after you go through a short sale.  (As a seller)  Plan on closer to ten years if you walk away from your house in a foreclosure.

But I’ve been wondering, with the thousands of short sales and foreclosures happening nationwide, how will lending institutions handle the huge number of people with badly damaged credit?  Will today’s strict lending guidelines continue, rendering all of those people untouchable and unable to buy anything for years to come?

The answer seems to be: maybe not…

Fannie Mae announced this week, that they will be relaxing their guidelines on lending to buyers who have gone through a short sale in the near past.

According to this article on Realtor.org, Fannie Mae will soon be OK with buying mortgages with borrowers who have undergone a short sale as soon as two years prior.  Previously, if a short sale experienced borrower somehow found a bank to write them a mortgage, that bank would be stuck with it for at least four years.

Fannie Mae buys a massive number of mortgages from banks every year and their guidelines for mortgage borrowers typically become the industry standard.  Now that they are relaxing their position on lending to those who have been through short sales could be the beginning of a larger “mulligan” period in american credit history.

Time will tell….

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