Freddie Mac is easing its policy on backing loans to formerly bankrupt or foreclosed borrowers.

Improved automated underwriting systems have made the changes possible, Freddie said.

Under rules to take effect May 1, loans made just four years after Chapter 11 bankruptcy protection, or two years after Chapter 13, would qualify. The same waits would apply after foreclosure or return of a home in lieu of foreclosure.

The two-year wait would also apply to borrowers driven to those steps by extenuating circumstances.

The present wait is seven years for foreclosure, 10 years for bankruptcy.

Chapter 11 is used to reorganize, usually by those whose debts exceed the Chapter 13 limits, $269,250 of unsecured debts or $807,750 of secured debts.

Freddie Mac is also revisiting its criteria for documenting credit rehabilitation after a bankruptcy or foreclosure.

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