Past foreclosure means waiting years for new loan :

Next to filing for bankruptcy protection, nothing wrecks a borrower’s chances of qualifying for a home loan like a foreclosure. And, some lenders may not look favorably upon borrowers who were able to successfully complete a short sale either.

Making sense of the story

• Although more than 4 million homes have been lost to foreclosure in the six years since the housing market began its descent, it’s a reality that the former owners will have to contend with the repercussions of foreclosures and/or short sales. However, the passage of time makes all the difference.

• The mortgage-lending guidelines followed by the majority of banks prohibit lenders from making loans to people with foreclosure or short sale in their credit history, often for years.

• Still, some homeowners who were foreclosed upon when the market first started to skid are now looking to buy another home and are getting approved for new loans.

• The likelihood of a borrower with a real-estate related blemish on their credit history being approved for a new loan depends on several factors, but largely on whether the borrower had a foreclosure or a short sale.

• Generally, borrowers who have a foreclosure in their credit history can expect to wait between two to seven years before a lender will even accept their loan application. The waiting periods stem from guidelines most banks must follow in order to sell their loans to purchasers such as Fannie Mae and Freddie Mac.

• If a buyer with a past foreclosure is seeking a government-backed mortgage, the waiting period can vary before they can qualify. The Federal Housing Administration, which insures roughly 30 percent of new loans, requires former homeowners to wait three years from the date of their foreclosure before they can qualify for a loan guaranteed by the agency.