About Pam
Pam Marron has been originating residential mortgages for 33 years!
I have originated FHA, VA, USDA and conventional loans in Florida for 33 years… and still love it! In today’s economic climate, it is necessary to not only qualify you as the buyer, but to also qualify the home you are looking at for a compatible fit to meet your family needs! Obtaining a mortgage loan in today’s market is not a simple task, and it is my committment to make this process as smooth as possible… so that you feel comfortable referring future friends and family to me!
I have unique experience helping consumers who have had a past short sale, deed in lieu or modification…. and who have this past mortgage credit coded as a foreclosure!
I live in Tampa Bay, Florida and experienced the bottom falling out of the housing market in 2006-2007. Though I had experienced downturns in the market, they were short and usually corrected themselves. This swing took on momentum, was unusually long, and many of us were wondering how the market sustained as long as it did. When the faucet turned off, we were left with massive home inventory where values had plummeted.
Underwater Home Value Off the Charts
In April of 2007, while helping an elderly couple with the newly launched FHA Secure which allowed for a refinance up to 115% of the value, to my horror, I found that the extra 15% equity came no where close to covering the loss of 60% equity in this clients’ home. I started investigating how far reaching this problem of dramatically reduced values was… local only? In other Florida counties, or other states? I went to a HUD meeting in Orlando and explained that the FHA Secure program at 115% was not nearly high enough to help, and many in the room of over 400 resounded the same. Negative equity, where more is owed on the mortgage then the home is worth, was being experienced at record levels. It was not just Florida, and the problem was mammoth.
Discovered: Foreclosure Code Wrongly Applied to Short Sale Credit
Fast forward to 2009. Mortgage business had grinded to a dead stop as new regulations were put in place. Past short sellers were able to come back into the housing market after two years, so I started an effort to assist these past homeowners back into housing. That’s when it was discovered that short sale credit was being coded as a foreclosure. The problem was not visually evident on a credit report. Instead, “Foreclosure” visibly showed up on the Fannie Mae Desktop Underwriting/Originating automated underwriting system (AUS) findings with the name of the affected lender, the account number and a “date reported”. The foreclosure code resulted in a new conventional mortgage loan denial even when the consumer was eligible for a new loan. at that time, the wait timeframe after a short sale was two years rather than the seven year wait time frame required after a foreclosure.
Root of Problem
Homeowners were losing jobs or taking pay cuts and many had to sell homes that were valued at less than the mortgage owed. these homeowners were tagged as ” underwater” with negative equity. The only way to work with the lender and sell a negative equity home was to do a short sale that required proof of the hardship and mortgage delinquency as the primary proof. Imminent default, where the homeowner was not yet delinquent on their mortgage but likely to go delinquent because of upcoming financial risk, was available. However, a mortgage holder in imminent default where the mortgagor was still current was rarely approved. Lenders were telling consumers who applied for a short sale that they would not be approved until their mortgage was delinquent! In disbelief, I started participating on three way calls with affected consumers and their lenders and verified that this was what the lenders were telling the consumers.
WHEN the foreclosure code would affect delinquent mortgage credit became the predominant question. it was soon realized that foreclosure code appeared when the consumer was over 120 days late, the common timeframe also applied to foreclosure proceedings. Mortgage denial cases started trickling in as consumers who thought they were eligible for a new conventional mortgage were denied. These are the cases that allowed an investigation of the foreclosure code problem, allowing a comparison of AUS findings for conventional, FHA , VA and USDA mortgages within both the Fannie Mae and Freddie Mac automated underwriting systems.
Help Comes From Unexpected Places
Many credit reporting agencies assisted in pinpointing specifically where the foreclosure code originated from. Acranet Credit reporting agency was the first to dive into the problem and connected to the National Consumer Reporting Association (NCRAinc.org) who took the problem to the Consumer Financial Protection Bureau (CFPB.gov). Soon, U.S. Senator Bill Nelson (D-Fl) was involved , taking the plight to a Senate meeting on credit and he demanded a solution to this problem that was affecting millions of past short-sellers.
Senator Nelson worked with the CFPB and Fannie Mae on a workaround that is available in the Fannie Mae desktop originator /underwriter automated underwriting system to this day.
Seeing the Differences Between 3 Credit Bureaus is Key. Meridian Link Platform With Credit Reporting Agency is Necessary.
Multiple credit platforms were evaluated and it was soon realized that one in particular, the Meridian link platform, provided the ability for a lender who pulled a tri-merged credit report to see differences in what each of the three credit bureaus, Experian, TransUnion and Equifax, reported for the same past mortgage. A link To the breakout of the three bureaus is provided through Meridian link while other platforms require the lender to call in for this information. I many cases, visual of these differences will not be provided. in order to show differences, a tri-merged credit report from credit reporting agencies that use Meridian link is done.
