source:
  type: guide
  id: fnma-sel-b3-5.3-07
  authority: Fannie Mae Selling Guide B3-5.3-07 — Significant Derogatory Credit Events
    — Waiting Periods and Re-establishing Credit
  description: Fannie Mae Selling Guide B3-5.3-07 — Significant Derogatory Credit
    Events — Waiting Periods and Re-establishing Credit.
  coverage_tier: operative
obligations:
- id: fnma-sel-b3-5.3-07-full
  canonical_id: fnma-sel-b3-5.3-07-full
  section: Fannie Mae Selling Guide B3-5.3-07 — Significant Derogatory Credit Events
    — Waiting Periods and Re-establishing Credit
  type: do
  tags:
  - regulator-direct
  - fnma
  - selling-guide
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: Fannie Mae Selling Guide B3-5.3-07 — Significant Derogatory Credit
      Events — Waiting Periods and Re-establishing Credit
    source_class: fnma-guide
    source_url: https://singlefamily.fanniemae.com/media/document/pdf/selling-guide
    snapshot_id: 5f7b8b79da595d76
    fetched_at: '2026-05-25T14:09:57Z'
    content_hash: sha256:98cf85a02861bbe84914a0e339b327c8fc131869a8a573882007bbeea60c5701
    paragraph_quote: 'B3-5.3-07, Signiﬁcant Derogatory Credit Events — Waiting Periods
      and Re-establishing Credit (08/07/2019) Introduction This topic contains information
      on the waiting periods for signiﬁcant derogatory credit events, including: General
      Information Identiﬁcation of Signiﬁcant Derogatory Credit Events in the Credit
      Report Bankruptcy (Chapter 7 or Chapter 11) Bankruptcy (Chapter 13) Multiple
      Bankruptcy Filings Foreclosure Foreclosure and Bankruptcy on the Same Mortgage
      Deed-in-Lieu of Foreclosure, Preforeclosure Sale, and Charge-Oﬀ of a Mortgage
      Account Summary — All Waiting Period Requirements Requirements for Re-establishing
      Credit General Information The presence of signiﬁcant derogatory credit events
      dramatically increases the likelihood of a future default and represents a signiﬁcantly
      higher level of default risk. Examples of signiﬁcant derogatory credit events
      include bankruptcies, foreclosures, deeds-in-lieu of foreclosure, preforeclosure
      sales, short sales, and charge-oﬀs of mortgage accounts. Note: The terms “preforeclosure
      sale” and “short sale” are used interchangeably in this Guide and have the same
      meaning (see Deed-in-Lieu of Foreclosure, Preforeclosure Sale, and Charge-Oﬀ
      of a Mortgage Account below). The lender must determine the cause and signiﬁcance
      of the derogatory information, verify that suﬃcient time has elapsed since the
      date of the last derogatory information, and conﬁrm that the borrower has re-established
      an acceptable credit history. The lender must make the ﬁnal decision about the
      acceptability of a borrower’s credit history when signiﬁcant derogatory credit
      information exists. This topic describes the amount of time that must elapse
      (the “waiting period”) after a signiﬁcant derogatory credit event before the
      borrower is eligible for a new loan salable to Fannie Mae. The waiting period
      commences on the completion, discharge, or dismissal date (as applicable) of
      the derogatory credit event and ends on the disbursement date of the new loan
      for manually underwritten loans. See B3-5.3-09, DU Credit Report Analysis, for
      additional information pertaining to DU loan caseﬁles, including how the waiting
      period is determined. Also see B3-5.3-08, Extenuating Circumstances for Derogatory
      Credit, for additional information. Note: The requirements pertaining to signiﬁcant
      derogatory credit are not applicable to high LTV reﬁnance loans. (See B5-7-02,
      High LTV Reﬁnance Underwriting, Documentation, and Collateral Requirements for
      the New Loan.) Published May 6, 2026 472 Identiﬁcation of Signiﬁcant Derogatory
      Credit Events in the Credit Report Lenders must review the credit report and
      the Declarations in the loan application to identify instances of signiﬁcant
      derogatory credit events. Lenders must review the public records section of
      the credit report and all tradelines, including mortgage accounts (ﬁrst liens,
      second liens, home improvement loans, HELOCs, and manufactured home loans),
      to identify previous foreclosures, deeds-in-lieu, preforeclosure sales, charge-oﬀs
      of mortgage accounts, and bankruptcies. Lenders must carefully review the current
      status of each tradeline, manner of payment codes, and remarks to identify these
      types of signiﬁcant derogatory credit events. Remarks Codes are descriptive
      text or codes that appear on a tradeline, such as “Foreclosure,” “Forfeit deed-in-lieu
      of foreclosure,” and “Settled for less than full balance.” Signiﬁcant derogatory
      credit events may not be accurately reported or consistently reported in the
      same manner by all creditors or credit reporting agencies. If not clearly identiﬁed
      in the credit report, the lender must obtain copies of appropriate documentation.
      The documentation must establish the completion date of a previous foreclosure,
      deed-in-lieu or preforeclosure sale, or date of the charge-oﬀ of a mortgage
      account; conﬁrm the bankruptcy discharge or dismissal date; and identify debts
      that were not satisﬁed by the bankruptcy. Debts that were not satisﬁed by a
      bankruptcy must be paid oﬀ or have an acceptable, established repayment schedule.
      Note: Timeshare accounts are considered installment loans and are not subject
      to the waiting periods described below. Bankruptcy (Chapter 7 or Chapter 11)
      A four-year waiting period is required, measured from the discharge or dismissal
      date of the bankruptcy action. Exceptions for Extenuating Circumstances A two-year
      waiting period is permitted if extenuating circumstances can be documented,
      and is measured from the discharge or dismissal date of the bankruptcy action.
      Bankruptcy (Chapter 13) A distinction is made between Chapter 13 bankruptcies
      that were discharged and those that were dismissed. The waiting period required
      for Chapter 13 bankruptcy actions is measured as follows: two years from the
      discharge date, or four years from the dismissal date. The shorter waiting period
      based on the discharge date recognizes that borrowers have already met a portion
      of the waiting period within the time needed for the successful completion of
      a Chapter 13 plan and subsequent discharge. A borrower who was unable to complete
      the Chapter 13 plan and received a dismissal will be held to a four-year waiting
      period. Exceptions for Extenuating Circumstances Published May 6, 2026 473 A
      two-year waiting period is permitted after a Chapter 13 dismissal, if extenuating
      circumstances can be documented. There are no exceptions permitted to the two-year
      waiting period after a Chapter 13 discharge. Multiple Bankruptcy Filings For
      a borrower with more than one bankruptcy ﬁling within the past seven years,
      a ﬁve-year waiting period is required, measured from the most recent dismissal
      or discharge date. Note: The presence of multiple bankruptcies in the borrower’s
      credit history is evidence of signiﬁcant derogatory credit and increases the
      likelihood of future default. Two or more borrowers with individual bankruptcies
      are not cumulative, and do not constitute multiple bankruptcies. For example,
      if the borrower has one bankruptcy and the co-borrower has one bankruptcy this
      is not considered a multiple bankruptcy. Exceptions for Extenuating Circumstances
      A three-year waiting period is permitted if extenuating circumstances can be
      documented, and is measured from the most recent bankruptcy discharge or dismissal
      date. The most recent bankruptcy ﬁling must have been the result of extenuating
      circumstances. Foreclosure A seven-year waiting period is required, and is measured
      from the completion date of the foreclosure action as reported on the credit
      report or other foreclosure documents provided by the borrower. Exceptions for
      Extenuating Circumstances A three-year waiting period is permitted if extenuating
      circumstances can be documented, and is measured from the completion date of
      the foreclosure action. Additional requirements apply between three and seven
      years, which include: Maximum LTV, CLTV, or HCLTV ratios of the lesser of 90%
      or the maximum LTV, CLTV, or HCLTV ratios for the transaction per the Eligibility
      Matrix. The purchase of a principal residence is permitted. Limited cash-out
      reﬁnances are permitted for all occupancy types pursuant to the eligibility
      requirements in eﬀect at that time. Note: The purchase of second homes or investment
      properties and cash-out reﬁnances (any occupancy type) are not permitted until
      a seven-year waiting period has elapsed. Foreclosure and Bankruptcy on the Same
      Mortgage If a mortgage debt was discharged through a bankruptcy, the bankruptcy
      waiting periods may be applied if the lender obtains the appropriate documentation
      to verify that the mortgage obligation was discharged in the bankruptcy. Otherwise,
      the greater of the applicable bankruptcy or foreclosure waiting periods must
      be applied. Published May 6, 2026 474 Deed-in-Lieu of Foreclosure, Preforeclosure
      Sale, and Charge-Oﬀ of a Mortgage Account These transaction types are completed
      as alternatives to foreclosure. A deed-in-lieu of foreclosure is a transaction
      in which the deed to the real property is transferred back to the servicer.
      These are typically identiﬁed on the credit report through Remarks Codes such
      as “Forfeit deed-in-lieu of foreclosure.” A preforeclosure sale or short sale
      is the sale of a property in lieu of a foreclosure resulting in a payoﬀ of less
      than the total amount owed, which was pre-approved by the servicer. These are
      typically identiﬁed on the credit report through Remarks Codes such as “Settled
      for less than full balance.” A charge-oﬀ of a mortgage account occurs when a
      creditor has determined that there is little (or no) likelihood that the mortgage
      debt will be collected. A charge-oﬀ is typically reported after an account reaches
      a certain delinquency status, and is identiﬁed on the credit report with a manner
      of payment (MOP) code of “9.” A four-year waiting period is required from the
      completion date of the deed-in-lieu of foreclosure, preforeclosure sale, or
      charge-oﬀ as reported on the credit report or other documents provided by the
      borrower. Exceptions for Extenuating Circumstances A two-year waiting period
      is permitted if extenuating circumstances can be documented. Note: Deeds-in-lieu
      and preforeclosure sales may not be accurately or consistently reported in the
      same manner by all creditors or credit reporting agencies. See Identiﬁcation
      of Signiﬁcant Derogatory Credit Events in the Credit Report above for additional
      information. Summary — All Waiting Period Requirements The following table summarizes
      the waiting period requirements for all signiﬁcant derogatory credit events.
      Derogatory Event Waiting Period Requirements Waiting Period with Extenuating
      Circumstances Bankruptcy — Chapter 7 or 11 4 years 2 years Bankruptcy — Chapter
      13 • 2 years from discharge date • 4 years from dismissal date • 2 years from
      discharge date • 2 years from dismissal date Multiple Bankruptcy Filings 5 years
      if more than one ﬁling within the past 7 years 3 years from the most recent
      discharge or dismissal date Published May 6, 2026 475 Derogatory Event Waiting
      Period Requirements Waiting Period with Extenuating Circumstances Foreclosure
      1 7 years 3 years Additional requirements after 3 years up to 7 years: • 90%
      maximum LTV ratios 2 • Purchase, principal residence • Limited cash-out reﬁnance,
      all occupancy types Deed-in-Lieu of Foreclosure, Preforeclosure Sale, or Charge-
      Oﬀ of Mortgage Account 4 years 2 years Requirements for Re-establishing Credit
      After a bankruptcy, foreclosure, deed-in-lieu of foreclosure, preforeclosure
      sale, or charge-oﬀ of a mortgage account, the borrower’s credit will be considered
      re-established if all of the following are met: The waiting period and the related
      additional requirements are met. The loan receives a recommendation from DU
      that is acceptable for delivery to Fannie Mae or, if manually underwritten,
      meets the minimum credit score requirements based on the parameters of the loan
      and the established eligibility requirements. The borrower has traditional credit
      as outlined in Section B3–5.3, Traditional Credit History. Nontraditional credit
      or “thin ﬁles” are not acceptable. When both a bankruptcy and foreclosure are
      disclosed on the loan application, or when both appear on the credit report,
      the lender may apply the bankruptcy waiting period if the lender obtains the
      appropriate documentation to verify that the mortgage loan in question was discharged
      in the bankruptcy. Otherwise, the greater of the applicable bankruptcy or foreclosure
      waiting period must be applied. 1 References to LTV ratios include LTV, CLTV,
      and HCLTV ratios. The maximum LTV ratios permitted are the lesser of the LTV
      ratios in this table or the maximum LTV ratios for the transaction per the Eligibility
      Matrix. 2 Recent Related Announcements The table below provides references to
      recently issued Announcements that are related to this topic. Published May
      6, 2026 476 Announcements Issue Date Announcement SEL-2019-07 August 07, 2019'
  judgment: false
