Freddie Mac is getting much tougher on borrowers!
The derogatory credit policy as outlined below must be applied to all Freddie Mac loans, including loans run through LP. Be sure you understand the consequences before you make a credit altering decision!
Short Sale:
All short sales are now considered derogatory credit
If the short sale was due to extenuating circumstances, the recovery time period for re-establishment of credit is 24 months from the date of completion
If the short sale was due to financial mismanagement, the recovery time period for re-establishment of credit is 48 months from the date of completion
Bankruptcy:
If a Chapter 13 bankruptcy is caused by financial mismanagement, the recovery time period for re-establishment of credit is 48 months from dismissal date
The existing requirement of 24 months from discharge date remains in effect
Foreclosure:
If a foreclosure is caused by financial mismanagement, the recovery time period for re-establishment of credit is 84 months