top of page
  • _

Fannie Mae Short Sales Reported as Foreclosures

If you went through a short sale on your Fannie-Mae-insured loan only to find that your credit report showed a foreclosure in your recent history, the GSE says that now the issue should be resolved. According to a report from the government-controlled Fannie, “the standardized computer software the credit industry was relying on lacked a specific code for short sales.” As a result, when Fannie Mae reported short sales to credit firms, those short sales were recorded as foreclosures. The GSE requires a seven-year waiting period before borrowing again in the wake of a foreclosure and only a two-year waiting period on a short sale, so many homeowners who opted for short sales have been surprised when their loan applications on new home purchases were denied based on past foreclosures[1].According to the GSE, a new policy for lending will allow lenders to “disregard the erroneous [foreclosure] codes when processing new mortgages.” This, the GSE believes, will enable buyers with past short sales to circumvent the computer glitch and proceed with their new loan origination[2]. Of course, complains short sale advocate Pam Marron, the change will not necessarily resolve lenders’ bias against short sellers, since, Marron says, often banks assume that homeowners conduct a short sale just to get out of paying their mortgages. She adds that this bias is unfair and inaccurate, saying, “there was all this press about strategic defaulters, and I could not find any strategic defaulters.”

0 views0 comments

Recent Posts

See All

The eviction moratorium announced this week by the Trump administration ended fears of an immediate wave of evictions. But the eviction ban, in effect through the end of the year, merely postpones the

bottom of page