Recently, Fannie Mae released new guidelines (Announcement 08-16) for borrowers with bankruptcy, foreclosure or pre-foreclosure on their credit report to qualify for a home loan. While the initial announcement did not specifically address short sales, the subsequent FAQ released on August 13, 2008 did in questions 6 and 7, excerpted below.

Is a preforeclosure the same as a short sale?

No, not necessarily, although historically the terms have been used interchangeably. For Fannie Mae’s purposes, a preforeclosure assumes that the borrower has been delinquent in paying his or her mortgage and the servicer/investor agrees to accept a lesser amount to avoid the time and expense of a foreclosure action. A short-sale, however, can refer to situations in which the servicer/investor of the mortgage agrees to a payoff of a lesser amount than is actually owed, even on a current mortgage, to facilitate the sale of the property to a third party.

If a borrower has completed a short sale and was never delinquent on that mortgage and is now attempting to purchase a new primary residence, will Fannie Mae purchase the loan?

If the borrower is purchasing a new property and the previous mortgage history complies with our excessive prior mortgage delinquency policy and does not have one or more 60-, 90-, 120-, or 150-day delinquencies reported within the 12 months prior to the credit report date, the loan is eligible for delivery to Fannie Mae, provided the lender or servicer who completed the short sale has not entered into any agreement that obligates the borrower to repay any amounts associated with the short sale, including a deficiency judgment.

Attached file FMNA 0816 faqs contains the entire FAQ that was released on August 13, 2008.

In summary, as long as a homeowner has not been more than 30 days late within the last 12 months, and a Waiver of Deficiency Judgment has been negotiated with the lender or servicer, then the short sale homeowner can qualify for a Fannie Mae secured loan immediately.