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