Pam Marron Home Lending

Finally, A Solution for Short Sellers

August 30, 2013 by · Leave a Comment 

August 30, 2013 Immediate Release

Media Contact: Pam Marron 727-375-8986

pmarron@tampabay.rr.com

www.CloseWithPam.com

 

Reference info attached: Senator Nelson/CFPB fix for the short sale code that will help the very people caught up in the short sale/foreclosure lack of appropriate coding

 NEWS RELEASE

FINALLY, A SOLUTION FOR SHORT SELLERS

Thanks to an assist from Florida Senator Bill Nelson, short sellers credit can be restored

NEW PORT RICHEY, FL (Aug. 29, 2013) – It appears that a solution to the short sale problem plaguing so many former homeowners for the past several years is about to become a reality.  

After the housing industry suffered major losses in 2007, it caused a negative ripple effect in mortgage companies, banks and lending agencies across the U.S.  Suddenly too many people were living in homes they could no longer afford. The equity had dropped out and now they owed more than the house was worth.  

For many of them the answer was to go through the process of a short sale – where the home was sold for less than the mortgage owed.  

Short seller credit suffered and worse, their short sales were coded incorrectly as foreclosures.  Often the previous owners of a short sale didn’t realize their credit was in jeopardy until they applied for a new mortgage on a home.  To add insult to injury, they also learned that the wrong coding – making a short sale appear as a foreclosure – meant that it would take seven years for them to get another mortgage.  Had the short sale been coded properly, the former home owners would have to wait only two years.  

In Florida alone, more than 40% of the housing inventory is still underwater, so short sales will continue for some time. Sen. Bill Nelson learned about the problem and worked closely with the Consumer Financial Protection Bureau (CFPB) to get the problem fixed. The problem appears to stem from denials of new mortgages in the Fannie Mae underwriting software. Fannie Mae has agreed to a correction that will become effective on November 16th of this year.  (see attachment)

Consumers who encounter this short sale coding problem are encouraged by the CFPB to “Submit a Complaint” at www.CFPB.gov  .  Also, short sales home owners are told to ask their lender for a letter at the completion of the sale indicating that it was indeed a short sale and not a foreclosure.  This letter shows proof to the next lender that the house was sold as a short sale.  

Pam Marron, a senior loan officer in Florida’s Tampa Bay area has sought a resolution to this problem for the last two years.  She hears the stories of past short sellers, sees the damage to their credit and hears frustration of being locked out of the housing market even though they are eligible to purchase again. “The solution is brilliant. We need to promote this important correction to kick start the real estate market and allow those that are eligible to repurchase a home again to do so” said Marron.

 

Link:

•Fannie Mae Fix effective 11/16/13: Fannie Mae Release Notes DU Version 9.1, pgs. 6-7:

https://www.fanniemae.com/content/release_notes/du-do-release-notes-11162013.pdf

 

Contact:

•Office of Senator Bill Nelson

Email to: http://www.billnelson.senate.gov/contact/email.cfm

Website: http://www.billnelson.senate.gov/

•Washington, D.C.; United States Senate; 716 Senate Hart Office Building; Washington, DC 20510 Phone: 202-224-5274 Fax: 202-228-2183

•Tampa, Fl.; Sam Gibbons Federal Court House; 801 N. Florida Ave., 4th Floor; Tampa, Florida 33602 Phone: 813-225-7040 Fax: 813-225-7050

•Consumer Financial Protection Bureau

Website: http://www.CFPB.gov (855) 411-CFPB (2372) TTY/TDD (855) 729-CFPB (2372)

• Pam Marron, Mortgage Loan Officer

Email to: pmarron@tampabay.rr.com Websites: http://www.CloseWithPam.com and http://www.8Problems.com

Phone: 727-375-8986 727-534-3445cell

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Senator Neslon Emblem

MEDIA ADVISORY:  August 22, 2013

 

CONTACT(S):  (202) 224-1679; (202) 309-1985

 Ryan Brown, press secretary

Rebecca Autrey, deputy press secretary

Emily Rogers, press assistant

Dan McLaughlin, deputy chief of staff, communications

 

Lender poised to announce fix for practice of entering misleading information in consumer credit files

 

Fannie Mae move comes as result of congressional scrutiny initiated by Nelson

 

WASHINGTON, D.C. – The nation’s largest home mortgage provider is expected to announce any day now that it has found a fix to the problem of computers reporting short sales as more financially harmful foreclosures in many consumers’ credit reports.

 

The fix stems from a congressional hearing held by U.S. Sen. Bill Nelson in May examining how the lending industry was reporting short sales with the same computer code used for foreclosures in the credit reports of an untold number of consumers. The practice tainted consumers’ credit ratings, and potentially delayed by a number of years their ability to qualify for new loans on purchases like homes or cars.

 

Banks and credit bureaus have said the reporting problem was caused by an error in the standardized computer software the industry used, which had no special code to report record a short sale – a transaction that was relatively rare prior to the economic downturn in 2008.

 

Now, according to Nelson’s office, an announcement is imminent that mortgage giant Fannie Mae voluntarily is changing its complex computer software to fix the controversial reporting practice.

 

“Regardless of the cause, I’m glad Fannie Mae is fixing the problem,” Nelson said today.  “You can’t punish homeowners who went upside down solely because of the economic downturn and loss of value in their home.”

 

The Florida Democrat’s staff is scheduled to meet with representatives of the lender and consumer regulators today. With Nelson the Consumer Financial Protection Bureau has been pushing for a solution. And U.S. Sen. Claire McCaskill, a Missouri Democrat, has also been key in finding a fix to the problem.

 

The CFPB oversees consumer financial products.  Nelson represents a state that has ranked among the worst in the nation for the number of homeowners who are underwater because of the late-2000’s recession and financial crisis.

 

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Short sales coded as foreclosures hurt credit

August 29, 2013 by · Leave a Comment 

channel 8 8.26

Posted: August 26, 2013

By Shannon Behnken

PASCO COUNTY, FL – For a distressed homeowner who owes way more on a mortgage than a home is worth, a “short sale” can be a ticket out of foreclosure.

A short sale occurs when a bank allows a home to sell for less than you owe, then writes off the rest. It’s supposed to be a black mark on your credit for just two years, instead of the usual seven years for a foreclosure.

“The benefit of entering a short sale agreement is that you’ll be able to re-enter the housing market a lot quicker than having a foreclosure on your credit,” said Joe Gendelman, of National Credit Federation in Tampa.

Gendelman said he’s working with dozens of clients who went through short sales, but then found a foreclosure listed on their credit years later.

The problem is bank and credit bureaus have no special code to report a short sale, so when a new lender checks your credit, it often shows up as a foreclosure.

So thousands of Bay area homeowners who completed short sales years ago are now having trouble buying another home, or even a car.

“Forty percent of homes in the state of Florida are under water.  So, it really creates a mountain that if people need to sell for some reason, many times they would have to be forced to do a short sale,” Gendelman said.

Mortgage Giant Fannie Mae, which underwrites mortgages, says it’s in the process of changing its computer system so that short sales are flagged.

In the meantime, experts recommend you ask for a letter from the lender who approved your short sale. That way, you have proof, if you need it.

Negative Equity Declines in 2Q13, but Trouble Looms for Many Homeowners

August 29, 2013 by · Leave a Comment 

By Evan Nemeroff  AUG 29, 2013 12:40pm ET

With home values rising over the last several months, the national negative equity rate is falling. But for millions of homeowners, it could take years for them to regain equity, Zillow said.

Approximately 12.2 million homeowners with a mortgage were in negative equity at the end of the second quarter, the Seattle-based real estate information provider said in a report. This figure is down from 13 million homeowners in 1Q13 and 15.3 million a year ago.

Even if home prices go up by 4.8% in the next year, it would take a homeowner who is 20% underwater about four years to reach positive equity, assuming appreciation continues at that rate going forward.

“Widespread rising home values during the past year have helped chip away at negative equity nationwide, helping many homeowners who were only modestly underwater to come up for air. For those homeowners who are deeply underwater, though, there is still a long row to hoe,” said Stan Humphries, chief economist for Zillow.

Overall, the negative equity rate for all homeowners with a mortgage is 23.8%. More than half (57%) of homeowners in negative equity are underwater by at least 20%. Furthermore, 13.4% of underwater borrowers owe more than twice what their properties are worth.

Among the 30 largest metropolitans areas covered by Zillow that have the highest percentage of mortgaged homeowners with negative equity in the second quarter are Las Vegas (48.4%), Atlanta (44%) and Orlando (39.8%).

Over the next year, Zillow is forecasting that the negative equity rate for homeowners with a mortgage will fall to at least 20.9%, which will help free 1.9 million borrowers from being underwater. The majority of these homeowners, Zillow said, that will fall into positive equity are anticipated to come from Los Angeles, Riverside, Calif., and Atlanta.

“The frustrating slow pace of negative equity declines in the face of such robust home value appreciation is a direct result of the fact that many people in the hardest-hit markets are underwater by an enormous amount,” Humphries stated. “Because of this, negative equity will be a factor in these markets for years to come, constraining the supply of homes for sale and keeping people out of the market who might otherwise get involved.”

 

 

 

Making the Case for Imminent Default Instead of Delinquency: Allow Underwater Homeowners to Move Forward

August 19, 2013 by · Leave a Comment 

For what seems like the hundredth time, I have spoken to another underwater homeowner who is bewildered about how to move forward. Their lender, realtor or attorney is telling them that they must go delinquent in order to exit a home where the amount of mortgage due is greater than the value of the home.

To put this problem into perspective, think about this comparison.

Two homeowners live side by side. Both have comparable incomes and good credit. One owes far more than the home is worth, but does not have the funds to pay the difference between what the home can be sold for and what they owe. The other homeowner owes less and could easily sell their home for greater than the mortgage amount due. Both work for companies that are cutting back employees and both homeowners are looking to relocate in their line of work.

The homeowner with the lower loan amount and equity calls a realtor, puts their home on the market and starts sending out resumes.

The negative equity homeowner is “underwater” and worries about how to exit the home. They question what a short sale is and are often confused and worried about what to do next. They are shocked when their lender, realtor or attorney tells them they need to be delinquent on their mortgage before the lender will approve their short sale.

They worry about credit and getting into a rental, at least.  What about the lingering credit problems they hear about of past short sellers?  They don’t tell friends, family or neighbors what they are doing because they fear being judged, especially by neighbors who will be angry at the lower price they have to ask for to sell the home.

Sending out a resume is the easiest thing these underwater homeowners can do.

They stall on everything else until they have financially wiped themselves out. At the end of their finances and options, they finally give in and ask for help.  

Homeowners that strive to stay current throughout a short sale have a hard time getting short sale approval. Though guidelines for most lenders allow for Imminent Default and some allow for payments to stay current, the reason for the short sale denial is usually cited as the lack of delinquency. Homeowners must fight to convince lenders that they are not “strategically defaulting” and leaving the lender with a loss, just to exit the home with an eligible hardship. Underwater homeowners now anticipate downsizing of income and households, need for larger homes, and a multitude of other logical reasons why a move is necessary.

This is where a broad understanding and application of Imminent Default could work pro-actively. Imminent Default is the preparation of a move before a delinquency occurs, rather than the pre-defined hardship of delinquency which presumes hardship right now. Imminent Default reasons are typically the hardship occurring, or will occur shortly, and will result in a mortgage default. If lenders:

1)paid attention to *ALL eligible hardships (not just the 4D’s: death, disability, divorce and distant relocation),

2)realized that servicing fees can still be paid when homeowners are current,

3)realized there is greater bottom line net when homeowners are current,

applying Imminent Default could go a long way in building much needed positive PR between lenders and future consumers.

The same importance we have historically placed on credit, and serious attention to the destructive loss mitigation practices that lenders currently impose upon underwater homeowners who must short sale and are left with ongoing damaged credit, both need to be addressed. It is estimated that there are at least 12 million U.S. homeowners still underwater that will need to short sale to go forward soon. The economy and the housing market recovery depend on attention to both of these matters.  

*Eligible hardships for Fannie Mae and Freddie Mac loans found on Uniform Borrower Assistance Form 710, https://www.fanniemae.com/content/guide_form/710.pdf

*Eligible hardships for FHA, VA, portfolio conventional loans acceptable to Making Home Affordable: U.S. Treasury Hardship Affidavit, https://www.hmpadmin.com/portal/programs/docs/hamp_borrower/hardship_english.pdf