We have been talking about bankruptcy and foreclosure and waiting periods -- and, of course, Fannie Mae's decision to adopt separate waiting periods for people who can prove that the "derogatory event" on their credit reports was the result of extenuating circumstances.
Some people hesitate to declare personal bankruptcy. It is a big step, and it is not a decision to be made lightly. However, someone deeply in debt should not worry that personal bankruptcy will close doors for them. There are rules, and there are waiting periods, as we have discussed in our last few posts, but bankruptcy is not "the end." It is, as we say often, a fresh start.
When Fannie Mae talks about a "derogatory event" on an applicant's credit record, the company is talking about a bankruptcy or a short sale, a deed in lieu of foreclosure, even a zombie foreclosure. These are events that could put a halt to a potential homebuyer's mortgage application. As we said in our last post, these are the events that trigger waiting periods.