Pam Marron Home Lending

Delete Credit Disputes

September 19, 2017 by · Leave a Comment 

How the Consumer can take “Dispute” off of their credit themselves for free

  1. Email customer credit report. Follow steps 3 and 4 to locate all repositories with dispute.
  2. Go to credit report. On account where dispute shows up, click on link (XP/TU/EF) (under PAID) to see individual 3 repositories.

  1. Below is what 3 individual repositories look like under Original Tradelines for creditor above. There can be up to 3 disputes noted, or 1 for each repository. Check each under Remarks for the word Dispute, Disputed or Disputes. Whatever Bureau the Dispute is noted for may need be deleted from credit report.

Important Note: Experian and Equifax below show Dispute in remark. TransUnion does not. Borrower only needs to request Dispute be deleted from Experian and Equifax.

disputes 2

  1. Call the Creditor (Vanderblt Mortgage, ph# listed on credit report). Tell them you no longer want to dispute validity of the debt & to remove the comment. Tell them you are in the process of a mortgage and clarify that this will be done in 72 hours.
  2. Ask that the dispute be deleted and request a letter from the creditor to confirm.
  3. Consumer calls each bureau back after 72 hours and confirm the disputed verbiage from contacted bureaus have been removed. Then, your housing counselor, loan originator or lender can re-pull a new tri-merged credit report.
    1. EFX#800-203-7843
    2. XPN#800-493-1058
    3. TU#800-916-8800

Through your HCA or lender that credit report received from, re-pull credit 48 hours after dispute removal requested.

How A Lender can Delete Dispute Through Rapid Rescore

Below is a generic dispute removal request letter if your credit bureau must do a Rapid Rescore. There is a cost for this.

Provide the letter shown below noting each account that dispute shows up on credit report for and the account#. Even if the dispute is noted under 1 to 3 of the repositories (EF/TU/XP), only list the account once with the account # on this letter. (Experian and Equifax only in example above.) Loan Officer/Processor must sign. Loan officer must pay for if file in process.

DATE

Equifax                       Transunion                  Experian                     Credit Reporting Agency name and address go here

PO Box 740256          PO Box 2000              PO Box 2002             100 Main Street

Atlanta, GA  30374    Chester, PA                 Allen, TX  75013        Anywhere, USA zipcode

RE:      TRADELINE AND ACCOUNT #

To Whom It May Concern:

I/We are writing to request the term “account information disputed by consumer” and/or “consumer disputes this account information” be removed from my/our account(s)/credit report(s).  I/We had previously disputed erroneous information that was reporting, but the above creditor(s) has since corrected this information, therefore, I/we no longer dispute the information being reported.  I/We have requested that each creditor update this with the bureaus.

I/We are requesting that it be removed as soon as possible, as I/we are no longer disputing this account or its status.

Sincerely,

BORROWER SIGNS NAME HERE

CONSUMER                                                              CONSUMER

CONSUMER ADDRESS                                           CONSUMER ADDRESS

SS#                                                                              SS#

In accordance with the Fair Credit Reporting Act (Section 611), CIC Credit will submit the above signed letter to all three repositories on behalf of the consumer. In order for dispute verbiage to be removed from the report thru the Rapid Rescore ™ process, this letter must be signed and dated by all consumers and Loan Officer/Processor.Please be aware, the removal of dispute verbiage through the rescore process in no way guarantees the creditor will not report the dispute to the repositories on their regular data download at their next reporting interval. The consumer must also contact each creditor to have them also remove the dispute and comments from the reporting data. CIC Credit will not be held liable for the creditor reporting the dispute after the rescore had been completed.LOAN OFFICER OR PROCESSOR SIGNES HERE AND DATES____________________________________________________ __________________Loan Officer/ Processor Acknowledgment                                       Date

 

ForeclosureCreditFix.com now open to check if foreclosure code on past short sale or modification

September 18, 2017 by · Leave a Comment 

ForeclosureCreditFix.com now open to check if foreclosure code on past short sale or modification

By Pamela Marron | September 2017 | for National Mortgage Professional Magazine

Though the consumer pays for this service upfront, loan originators can provide a credit towards the cost at the closing of a new mortgage. Loan originators who agree to provide this credit will be promoted on the Foreclosure Credit Fix Network map at http://foreclosurecreditfix.com/network along with lenders, realtors and credit reporting agencies who want to assist these clients.

 What do nearly 3 million past short-sellers and over 5 million homeowners who have had a modification have in common? All of them may be affected by a foreclosure code that continues to be applied to mortgage credit of a past short sale or modification and results in a new conventional mortgage denial.

 HUD approved counseling agencies have launched an effort to check for a foreclosure code on mortgage credit of past short sellers and those who have had a modification and get it corrected before the consumer attempts to get a new mortgage. Though this service is for the affected consumer, it is also the resource for loan originators, lenders, realtors and credit reporting agencies to send clients to for help. Thanks to the National Foundation for Credit Counseling (NFCC.org) and member HUD approved counseling agency Navicore Solutions, affected consumers can get this problem checked out and resolved before they purchase a home again. Clients can call 1-866-702-4557 or email housing@navicoresolutions.org. When the problem is corrected and these clients are “mortgage ready”, they can be referred to loan originators, lenders and realtors.

The foreclosure code issue affects past short sellers and those with a modification who apply for a new conventional mortgage. There are three reasons why this problem is not being caught and dealt with by lenders ahead of a purchase:

  1. affected consumers have met the four-year wait timeframe required after a short sale or the two-year wait timeframe required after a modification.
  2. The foreclosure code is not visible on a tri-merged credit report.
  3. because of the 2 previous reasons, there is no urgency of lenders to run these loans through the Fannie Mae and Freddie Mac automated underwriting systems upfront.

The problem is often found during a live contract when the loan is run through both the Fannie Mae and Freddie Mac automated underwriting systems. When it is found, the consumer has four options:

  1. Re-run the loan through the Fannie Mae Desktop underwriting system using Fannie Mae’s workaround. (Freddie Mac does not have a workaround.)
  2. Change the loan to an FHA mortgage which allows for a manual underwrite.
  3. Change the loan to a portfolio conventional mortgage which is usually a higher interest rate with greater costs and more down payment required.
  4. lose the contract.

The solution can be a two-step process. The first step determines if the foreclosure code exists and could include utilizing the Fannie Mae workaround. The second step is to make sure that a more recent “date reported” of the affected account does not exist. If the automated system reads that the short sale or modification occurred within the minimum wait timeframe, this can be a reason for a denial. The “date reported” problem often occurs when a “dispute” is put on the affected account. Because the account is re-opened, the more recent “date reported” is recorded and cannot be changed.

Other pre-purchase housing and credit counseling is also available from HUD approved counselors about buying a home, renting, default, foreclosure avoidance, credit issues and reverse mortgages. Some services are free and others are on a sliding scale basis. To find counselors in your area, go to HUD Approved Housing Counseling Agencies at https://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm, click on your state and check under Counseling Services and for agencies in your area.

For more in-depth credit counseling and debt management (NOT to be confused with credit repair), go to the National Foundation for Credit Counseling (NFCC.org) agency locator at https://www.nfcc.org/locator/. All member agencies have HUD approved housing counselors with additional specialized training to deal with credit issues.

As we turn the corner on the housing crisis, lingering problems still need our attention. Thinking of those who were affected by Hurricane Harvey, the mortgage and real estate industries have an opportunity to form new, strong alliances with housing counseling agencies for specialized services that we are not equipped or trained to deal with.

Stay tuned.

 

 

 

HUD Housing Counselors Continue Assisting Negative Equity Homeowners

July 28, 2017 by · Leave a Comment 

Housing counselors continue to assist negative equity homeowners who need help staying put in homes while working on initiative to assist those having trouble reentering the housing market because of foreclosure code wrongly applied to past mortgage credit

HUD approved housing counselors can still assist homeowners struggling to stay put in negative equity homes. But a new effort will check credit of those who have had a past short sale, modification, deed in lieu or excessive mortgage late’s where foreclosure code is applied and causes a mortgage denial for past homeowners eligible for a new mortgage.

Current funding still exists to help homeowners with negative equity who are struggling to stay in their home, but not for long. National Foreclosure Mitigation Counseling funding will expire on September 30, 2017 so here’s a shout out to loan originators and realtors: Refer clients that you know are in need to HUD approved housing counselors that can be located in each state at HUD.gov.

As we turn the corner from the housing recession, problems continue to linger. In 2011, it was found that short sale credit was often coded as a foreclosure and is easily spotted where mortgage delinquency over 120 days occurs. In 2013, Senator Bill Nelson of Florida demanded that this problem be corrected and a workaround was done in the Fannie Mae automated system. But there was never a workaround done in the Freddie Mac system and due to the popularity of the Freddie Mac Home Possible program, past short-sellers with the foreclosure code issue are now being denied through the Freddie Mac Loan Product Advisor automated system. Further, all were stunned when an initiative started by the housing counseling industry for affected past short-sellers resulted in finding that the foreclosure code was also being applied to those with a modification and often a deed in lieu.

The root cause of this problem is not the Fannie Mae or Freddie Mac automated underwriting systems. Recently, a past homeowner who did not have a short sale, modification or deed in lieu but did have excessive mortgage late’s before she sold her home applied for a car loan at a credit union. She was denied the loan because her past mortgage credit showed up as a foreclosure and the loan was never run through the Fannie Mae or Freddie Mac automated systems.

The root of this problem appears to be that foreclosure code is applied to a mortgage when delinquency over 120 days occurs. The verbiage “settled for less than full balance” or that a loan is classified as a modification or deed in lieu does not appear to be superior to a payment history that is 120 days or more delinquent.

There is no specific credit code for a short sale or modification and there needs to be. And we need specific clarification to use credit code “89” for a completed deed in lieu. We need this now so that past homeowners who did the right thing and worked with their lender or a housing counselor to stay in their homes for as long as they could do not have their credit wrongly coded, causing future turmoil when they try to purchase a home again. We haven’t even scratched what this problem is doing to their other consumer credit.

Credit…. Having good credit…. Is what every American is taught about at an early age and what they strive for. Credit is what makes the economy run and better credit leads to better reward. It is frustrating that we are still dealing with a problem that the masses have known about for years, but that is adversely affecting the credit for millions and stalling many from reentering the housing market.

Last week, the offices of two Senators and three Congressman who get this problem were visited. The problem and a way that the housing counseling industry can help were shown to mortgage industry stakeholders at the HOPE NOW Fly-In. Presently, the housing counseling industry is fine tuning a process that will provide affected consumers with a correction to this problem…. before they purchase a home again. Our hope is to promote this service to loan originators and realtors and to have them refer potentially affected consumers to housing counselors who will take care of this problem before consumers purchase again. All of this is being done while we work on a bi-partisan effort with legislators to get a specific credit code for both short sales and modifications.

Stay tuned.

Housing Counselors Hone Skills for Service That Will Assist Those with Past Short Sale, Deed-in-Lieu or Modification Where Credit Shows Up as Foreclosure

July 8, 2017 by · Leave a Comment 

By Pam Marron | National Mortgage Professional Magazine |July 2017

Step One… Loan Originators and Realtors need to ask ALL clients if they’ve had a short sale, Deed in Lieu (DIL) or loan modification in their past. If they have, run the loan through Fannie Mae and Freddie Mac automated systems first to see if foreclosure credit, a “dispute” or incorrect “Date Reported” exists.

Step Two… spread the word that HUD approved housing counselors can assist these clients to correct (not temporarily hide) erroneous credit to get affected consumers “mortgage-ready” ahead of signing a contract.

 Many of nearly 3 million consumers with a past short sale, over 5 million who have had a loan modification and an unknown number with a past DIL need urgent attention to correct a credit error known about since 2011. Affected past homeowners are now eligible to purchase a home again but are being denied new Fannie Mae and Freddie Mac conventional financing where their credit for a short sale, deed-in-lieu or modification shows up as a foreclosure and results in a new loan denial.

The initial problem is when short sale, DIL and modification credit shows up as a foreclosure, often anticipated if past late mortgage payments went over 120 days.

When the affected consumer is told their credit wrongly shows up as a foreclosure, a “dispute” is placed on the account which simply hides the credit from the Fannie Mae and Freddie Mac automated systems… and then must be deleted when the client applies for a new mortgage. (A new change to the Fannie Mae “dispute” policy will take effect on July 29, 2017.)

And, because the account was re-investigated after the short sale, DIL or modification closing date, the “Date Reported” becomes more current, causing the automated system to provide a denial because it appears that the required wait timeframe has not been met.

Loan originators often proceed with processing a new mortgage after checking the required wait timeframe against the closing date of the past short sale, DIL or modification. But sometime during the process or even as late as underwriting, the loan is run through either Fannie Mae or Freddie Mac automated systems where the problem is first seen. Many lenders are unaware of the Fannie Mae workaround (there is no workaround for Freddie Mac!) and often tell blind-sided consumers to “go get your credit fixed and come back.” With the limited supply of housing inventory, sellers are reluctant to extend closing dates for additional time needed to investigate the credit error. Many homebuyers either lose the contract due to the delay to get this fixed or change their loan type to a higher interest rate portfolio loan or an FHA loan.

It makes sense to engage the housing counseling industry into a pre-purchase solution. Loan originators are driven by contract deadlines. Non-profit housing counseling agencies work with clients on the “heavy lifting” to get issues corrected. And HUD approved housing counselors were able to verify “Economic Events” for extenuating circumstances for the past FHA “Back to Work” program.

Leading this initiative is the National Foundation for Credit Counseling (NFCC.org), a non-profit organization with HUD approved housing counselors and credit counseling services. The organization is training and testing solutions to address known fixes, with an emphasis on assisting affected consumers before they even sign a contract. The goal is to alert the real estate and mortgage industries of this service to get potential affected clients “mortgage ready” before sending them back to the real estate and mortgage professionals.

Providing this individualized service to those with a past short sale, DIL or modification who want to purchase a home again is a tremendous relief to these consumers who don’t want to relive their past nightmare again.

This pre-purchase assistance needs to be promoted to affected consumers, the mortgage and real estate industries, loan processors and credit reporting agencies. Correcting issues can be as quickly as 1 day to 60 days.

This will be an up-front fee paid service from an individual housing counselor. Loan originators who wish to assist these clients can refer them to HUD approved housing counselors who have been trained on how to get these unique credit issues corrected once and for all. Then, when the client is deemed “mortgage ready”, they can come back to the loan originator who can provide a credit back towards mortgage closing costs when these folks are ready for a new mortgage.

Everyone benefits. Stay tuned.

Join FAMP’s Gulf Coast Chapter June 20 for Lunch and Learn

June 20, 2017 by · Leave a Comment 

Lunch and Learn slider June 2017

This class is geared for all mortgage professionals who have had an issue with correcting the credit report.

Pam Marron, Loan Originator, and Theresa McCoy, CIC Credit Reporting Agency, to show how correct inaccurate foreclosure credit in short sale and loan modifications for the Gulf Coast Chapter of the Florida Association of Mortgage Professionals in this Lunch and Learn program at Chili’s, 2903 N. Dale Mabry in Tampa on June 20 from 11:30-1pm.

Register at http://planetreg.com/junelunchandlearn

Download the Case Studies from Pam Marron’s presentation (Parts 1 & 2) by clicking below:

7.-10-case-studies-4-17-17-Part-1

7.-10-case-studies-4-17-17-Part-2

These are 10 Case files where foreclosure credit code showed up on past short sales, modifications or neither. Analyzing credit and differences between what is seen on Fannie Mae and Freddie Mac automated systems.

Dodd-Frank: Trump says roll-back, consumers map fight back

June 14, 2017 by · Leave a Comment 

Kevin McCoy and Roger Yu , USA TODAY Published 7:02 a.m. ET June 14, 2017 |

Newly announced Trump administration plans to weaken or eliminate many financial-industry regulations enacted after the 2008 financial crisis mark the opening shot in what consumer groups predict will be a long Washington siege.

On Tuesday, the day after the Department of the Treasury issued the most detailed blueprint yet of proposed changes to the Dodd-Frank Wall Street Reform and Consumer Protection Act, banking and other financial groups celebrated Trump’s backing of changes they’ve sought for years. The list ranged from restructuring and weakening the Consumer Financial Protection Bureau to reexamining Wall Street trading and mortgage rules.

“The Treasury Department’s report is an important first step in recognizing how a duplicative and onerous regulatory environment harms banks, the economy, and, more importantly, consumers,” said Richard Hunt, the CEO of the Consumer Bankers Association, a trade association for retail banks.

Consumer advocates argue that the proposals represent an unwarranted weakening of rules that reined in banks and Wall Street after their excesses contributed to the nation’s worst economic crisis in generations. But major changes won’t come soon, if at all, because eliminating federal laws or Washington agency rules can take years, the advocates say.

“The prospects for preventing the rollback of many of these rules are actually quite good in terms of delay, and probably not bad in terms of preventing,” said Dennis Kelleher, the president and CEO of Better Markets, a Washington, D.C.-based nonprofit group that promotes the U.S. public’s interests in financial markets. “Enacting the administration’s regulatory agenda can be as difficult as enacting its legislative agenda if there is effective opposition.”

File photo taken in 2015 shows Richard Cordray, director of the Consumer Financial Protection Bureau, at a hearing in Denver, Colorado.(Photo: Brennan Linsley, AP)

Lobbying will likely spread across multiple fronts. But perhaps nowhere are the disagreements hotter than over the Consumer Financial Protection Bureau. Echoing complaints from Congressional Republicans, the Treasury report said the CFPB’s leadership — a lone director only loosely accountable to the president and wielding authority to enforce 18 federal financial laws — has made the agency “unaccountable to the American people.”

In response, the Treasury report recommended:

Authorizing the president to remove the CFPB’s director at will, rather than only when he or she is found to have done something improper.

Considering an alternative leadership structure of an “independent, multi-member commission or board.”

Changing the agency’s funding procedure to require oversight by the U.S. Office of Management and Budget, as well as congressional review.

Switching enforcement actions to federal courts, rather than administrative proceedings handled internally at the agency.

Eliminating public access to underlying data in the agency’s consumer complaint database by restricting that material to federal and state agencies.

Stripping the agency’s supervisory authority over banking and other areas covered by other regulators.

Paul Merski, a Community Bankers of America vice president, applauded yet another proposal, one that would exempt banks with assets of $10 billion or less from complying with CFPB rules that remove some risk features from mortgage loans. That list includes an “interest-only” repayment period, balloon payments required at the end of some mortgages, loan terms longer than 30 years, and excessive upfront fees charged to consumers.

“The main reason for community bank relief is so that they can support growth and jobs,” Merski said.

The CFPB maintained an official silence on the Treasury proposals. Instead, the regulator announced that its director, Richard Cordray, would hold a Thursday public event in Raleigh, N.C. to discuss student loan servicing issues, an area of continuing concern for students who say some loan servicers have not helped the get into income-based repayment plans.

However, Alys Cohen, a staff attorney for the National Consumer Law Center, said the proposals would “kick the legs out from under the CFPB,” which reported it had provided nearly $12 billion in relief and assistance to more than 29 million consumers from its 2011 opening through the end of February 2017.

A random sampling of consumers referred by advocacy groups readily agreed.

In Minnesota, John Lukach said he filed a complaint with the CFPB after Navient, the servicer for his nearly $60,000 in private student loans, did not respond to his requests for more affordable repayment options that would cut his monthly bill. Within two days, a Navient representative contacted him to discuss available alternatives, “something that probably wouldn’t have happened” without the CFPB, Lukach said.

In Arkansas, Myra Brewer, 71, said a debt collector called her and tried to force her to repay a roughly $3,000 credit card debt the company said was owed by her late daughter. She refused, even as the company called multiple times a day for weeks, Brewer said. Ultimately, she obtained the name of the bank that had put the purported loan out for collection and then filed a complaint with the CFPB. “That got action,” she said.

In Florida, a mortgage loan originator Pamela Marron noticed that many former homeowners who’d been caught in a wave of financial crisis short sales — selling their houses for less than the mortgage total — had trouble reentering the housing market. The reason, she determined, was that the nation’s three major credit reporting agencies coded the short sales as foreclosures. That meant the consumers could not qualify for conventional, federal government-backed mortgages for seven years.

After Marron filed complaints with the CFPB, banks re-coded the consumers’ mortgage applications and started processing them. “The CFPB people were very helpful because they understood the data we were looking at,” she said.

Armed with similar consumer experiences, advocacy groups are already discussing efforts to block Washington’s efforts to weaken the CFPB.

Kelleher, the Better Markets CEO, likened the efforts to the recent consumer drive that stopped the administration from derailing an Obama-era rule that now requires financial advisers to put consumers’ interests above their own. The regulation went into partial effect last week, but enforcement isn’t set to start until January.

“Big parts of that coalition will also work against deregulation” elsewhere in the financial industry, Kelleher said.

Follow USA TODAY reporter Kevin McCoy on Twitter: @kmccoynyc

______________________________________________________________________________________________

In USA Today. Help that CFPB provided for short sale code problem noted. CFPB “Submit a Complaint” worked when other fixes did not. Directions: http://housingcrisisstories.com/submit-a-complaint-cfpb/

https://www.usatoday.com/story/money/2017/06/14/dodd-frank-trump-says-roll-back-consumers-map-fight-back/102814996/

© 2017 USA TODAY, a division of Gannett Satellite Information Network, LLC.

Dodd-Frank: Trump says roll-back, consumers map fight back

Call to weaken post-crisis financial safeguards could face long battle

Pre-purchase help coming from HUD approved housing counselors to assist clients who still have credit issues with a past short sale or modification

May 4, 2017 by · Leave a Comment 

By Pamela Marron | National Mortgage Professional Magazine | May 2017

HUD approved housing counselors are being trained to provide assistance for clients who continue to have problems with short sale and modification credit that appears as a foreclosure. The goal is to correct problems prior to a new purchase.

A collaborative initiative has begun that connects loan originators who have clients with a past short sale or a modification with HUD approved housing counselors who can make sure that common credit issues are resolved before clients sign a home purchase agreement. The goal is to provide correction to a continued problem of foreclosure credit code that incorrectly shows up on short sale and modification credit and often results in a loan denial and loss of contract. Worse yet, a foreclosure coding delays a new conventional mortgage for seven years rather than the four year wait required after a short sale. And recently, it has been found that modification credit is being affected with the same foreclosure code.

Over 1 million past short-sellers are now beyond the four year time frame and are eligible to purchase a home again. Another 950,000 will become eligible over the next three years. For those with modifications, no wait timeframe is required and over 1 million have been put in place from March 2009 to March 2017.

Correcting continued credit issues ahead of signing a contract for eligible past short-sellers is the focus of a small group of loan originators and housing counselors who are preparing this initiative. “Too many times, past short-sellers are told within the processing time and during a live contract that their short sale shows up as a foreclosure, and that they need to go get it fixed and come back.” states loan originator Pam Marron. “A service is needed for affected clients to get this credit issue permanently resolved ahead of time so that these clients are mortgage – ready.”

Fannie Mae developed a workaround in August 2014 but not all lenders know about it. There is no workaround in Freddie Mac. And though both Fannie Mae and Freddie Mac note there may be exceptions when inaccurate credit exists, lenders are reluctant to address this.

Marron cites that additional credit issues commonly grow out of the inaccurate foreclosure code for most of these clients when they either attempt to remedy the problem themselves or go to credit repair companies. A “dispute”, the most common fix, temporarily masks the short sale credit and appears to work when credit scores go up. However, when the consumer applies for a mortgage, either the underwriter, Fannie Mae or Freddie Mac automated system findings require that the dispute be taken off. The result is that credit scores plummet, a conventional mortgage denial is received and a delay to fix often occurs and can be a serious problem if a contract deadline is looming. If the consumer is in a contract, the quickest remedy is a Rapid Rescore that must be paid for by the lender. Often, the resulting credit scores are lower and the consequence is a higher interest rate.

A second problem is a more recent “date reported” when the short sale credit is reopened in order to get it corrected. The more recent date reported often falls within the four year wait timeframe causing the Fannie Mae and Freddie Mac automated systems to issue a denial due to the wait timeframe not being met.

Marron thinks this service coming from third party HUD approved housing counselors is a perfect fit. “Loan originators are driven by contract deadlines. Housing counselors are not.”

Solutions for correcting the credit issues discussed are already available but assisting those who have had a past short sale or modification is the best way to find more ways for correction. Ms. Marron and Jim McMahan, a loan originator in Georgia, will begin taking calls for consumers with a past short sale or a modification this month. The National Foundation for Credit Counseling (NFCC.org) will start this effort and utilize HUD approved housing counselors to work with affected consumers to ensure the credit issues of a past short sale will not hamper their ability to get a new conventional mortgage.

There will be a fee for the one on one counseling and a credit towards closing costs on a home purchase can be provided. Contact Pam Marron at 727-375-8986 or email pam.m.marron@gmail.com or Jim McMahan at 404-808-0945 or email jim@mcmahanmortgage.com.

Stay tuned.

Drill Down on Short Sale and Modification Credit

April 4, 2017 by · Leave a Comment 

By Pam Marron | National Mortgage Professional Magazine | April 2017

Recently, a joint effort of the mortgage and the housing counseling industries to remedy continued credit problems of past short sellers who continue to receive a foreclosure credit code on their past short sale credit was investigated. While reviewing data, it was learned that this same credit code problem also affects consumers who have had a modification. The foreclosure code problem seems to be present when mortgage lates go past 120 days, a trait present in many short sales and modifications. But we were stunned when the foreclosure credit code also showed up on a consumer who had excessive mortgage lates… but no short sale, foreclosure or modification.

To prove the data found, nine cases including short sales, a modification, a Deed in Lieu and one where none of these existed were set up in the same format. A tri-merged credit report was pulled for each and a visual of the problem credit trade line was provided as well as a snapshot of the individual bureau repositories of Experian, TransUnion and Equifax.

Fannie Mae

All cases were run through the Fannie Mae Desktop Originator (DO) automated underwriting system (AUS) with the tri-merged credit report. A visual of the findings for an approval or declination and what the blended tri-merged credit in Fannie Mae looks like was provided.

The Fannie Mae workaround was used for loans that received a Desktop Originator Refer with Caution and it worked… even on the modification.

There is no workaround for Freddie Mac.

Freddie Mac

For Freddie Mac, cases were run through the Loan Prospector Advisor (LPA) first with the lender tri-merged credit report. Then, the case was run again using the credit in-file option allowed internally through Freddie Mac’s LPA. A snapshot of Freddie Mac’s tri-merged credit and the separate credit in-files was included.

Here is what was found in Freddie Mac:

  • There is no variation for foreclosure verbiage. Either “13. Recent foreclosure/signif derog appears on credit report” appears in findings, or it does not.

Other remarks are often included:

  • “64. Crdt rpt w/recent mtg delinq or review mtg credit history”
  • “YW. The Borrower has had a foreclosure within the last seven years. The mortgage file must also contain evidence of the completion of the foreclosure.”

Number of consumers at risk

Thanks to RealtyTrac (now ATTOM Data Solutions), it was learned that there were 1,978,754 short sales and deeds in lieu completed from 1/1/2010 through 12/31/2016.

The wait timeframe after a short sale or deed-in-lieu is 4 years, rather than the 7 year wait timeframe after a foreclosure.

Thus, as of Dec. 31, 2016, 1,032,211 of those with a past short sale or deed-in-lieu are past the 4 year wait timeframe and are now eligible to re-enter the housing market. Any of these clients and additionally those who had a modification or who had mortgage lates past 120 days will most likely encounter a new mortgage denial for a Fannie Mae or Freddie Mac conventional mortgage.

We haven’t even looked at the number of modifications affected yet.

How Problem Continues

A conventional mortgage denial occurs when the automated underwriting system reads credit code of a past short sale as a foreclosure. When the lender calls Freddie Mac or Fannie Mae, support tells the lender that the information is coming from one or more of the bureaus (TransUnion, Experian or Equifax). Ultimately, the consumer is told they must get the credit fixed with the bureau(s) where the foreclosure code is coming from, though Fannie Mae has a workaround for this problem.

The borrower tries to get this fixed by placing a “dispute” on the account. The “dispute” hides the actual credit from Fannie Mae and Freddie Mac automated systems and must be lifted from the credit when the consumer applies for a new mortgage. When the dispute is lifted, the problem credit comes back and most often credit scores plummet. This results in a higher rate for the consumer and the lender must pay for a Rapid Rescore, the quickest way for consumers to get a credit score change. This is a big problem when found during a contract with a deadline. Lenders that end up paying for the Rapid Rescore often do not want to assist consumers where this problem is anticipated due to the cost the lender must incur.

Another problem is the “Date Reported”, or a more recent change to an account than the initial occurrence date. The more recent date often exempts a past short seller from a new conventional mortgage when it falls within the minimum required wait timeframe. This date cannot be changed per credit reporting agencies.

Stay tuned.

National Real Estate Post is Off the Mark – Here are the Facts!

March 15, 2017 by · Leave a Comment 

3/15/17

Dear National Real Estate Post;

With all due respect, you are totally off the mark in today’s video: http://thenationalrealestatepost.com/treasury-giving-away-50k-to-lower-your-mortgage/?utm_source=feedburner&utm_medium=email&tm_campaign=Feed%3A+TheNationalRealEstatePost+%28The+National+Real+Estate+Post%29

The I-Refi program in Illinois is one of three principal reduction programs throughout the United States. Florida https://www.principalreductionflhhf.org/<https://l.facebook.com/l.php?u=https%3A%2F%2Fwww.principalreductionflhhf.org%2F&h=ATO1fWZjNP8A32GMRnUmkN6naeG4Dz4BmkIbMUe5hdCx36xXo6DxrBc4BJzxt0bxbJpKEzhXkzGW7c6xnQA2pP7Zl2uG-IMYvA7oSGS_1F6HbAeNr1Dfqpl2BcLU7NyNBQs> and California https://www.treasury.gov/…/Changes-to-California%E2%80…<https://l.facebook.com/l.php?u=https%3A%2F%2Fwww.treasury.gov%2Fconnect%2Fblog%2FPages%2FChanges-to-California%25E2%2580%2599s-Principal-Reduction-Program-Attract-More-Mortgage-Servicers.aspx&h=ATMSD1J7t67l3Fj34SmuLQZ-V2HZYFvMjiXFcqgGvNBr6GqdmiiN-UhlqFmbwq4pumGNn7bXbvlGLPZs3ubEZctb_Aj4Rped9Hnn8EGX-Zcsc5vQK80Cn1IGuQmLlOziY6Y> have this program as well. There is income criteria developed not too much different than MSA income used for Home Ready, Home Possible and USDA standards for targeted areas, and an appraisal must provide proof of minimum negative equity.

HOW does I-REFI program help?

The key here is that over 5.4 MILLION homeowners who still have negative equity, are trying to stay put in their home and are current on their mortgage have NO REFINANCE OPTION. If you have a negative equity NON-Fannie Mae or NON-Freddie Mac conventional first mortgage, or a negative equity second mortgage or HELOC, THERE IS NO REFINANCE OPTION AVAILABLE! The only option for better payments for these negative equity loans is a modification from the lender that requires proof of hardship and mortgage delinquency first!

How Many Homeowners are STILL Underwater As of December 2016, there are still 5.4 million homeowners seriously underwater where combined first and second mortgage exceeds 125% per RealtyTrac, (now ATTOM Data Solutions) See chart below and article:http://www.realtytrac.com/…/2016-home-equity-and…/<http://l.facebook.com/l.php?u=http%3A%2F%2Fwww.realtytrac.com%2Fnews%2Fhome-prices-and-sales%2F2016-home-equity-and-underwater-report%2F&h=ATOc2jybWm5plCAanfVNAU490qOjH__LpF5_FqNbyRbudoXeGZM2ovtMsoPvXQ4So4A9sr6cQV9yLlU0tqIGyaT8ksz-Sq1mNYb4Q66x-zRIJdiKSNVM8mMFUnP0e27vuvQ>.

PLEASE stop assuming those with negative equity homes are deadbeats that can’t afford to make their payments. Most of the 5.4 million homeowners who are still underwater struggle while waiting for equity to return, and are paying higher interest rates from 8 to 10 years ago. Many of them have resetting interest only first and second mortgages that cannot be refinanced and these underwater homeowners pay higher payments simply because there is no option for a refinance. And a great number of them are elderly who took out funds from their home to help children years ago.

The Principal Reduction Program (with strict criteria) allows those who have managed to stay current to receive up to a $50,000 reduction that puts them into an acceptable LTV to be able to refinance and stay in their home. The goal here is to keep those in negative equity areas in their homes rather than experience another wave of short sales and foreclosures. These Hardest Hit Funds are not new. The Hardest Hit Funds of 7.6 billion allocated in 2010 were provided to 18 states who suffered the most during the housing crisis. These funds were tailored by each state to meet the needs of struggling homeowners.

As of December 2016, Florida is at the top of the list with 807,607 STILL negative equity properties with a combined loan to value over 125%. California is 2nd and Illinois is 3rd.

Q4 2016 negative equ 125 or more ATTOM Data

Also, here is the link to the Illinois I-REFI program to check out program criteria: https://www.ihda.org/…/uploads/2016/03/7-12-16_I-Refi.pdf<https://l.facebook.com/l.php?u=https%3A%2F%2Fwww.ihda.org%2Fwp-content%2Fuploads%2F2016%2F03%2F7-12-16_I-Refi.pdf&h=ATOhEN8qHEO6vJWuVPUDfDv88soW83Xuy9ADCEQdkLu08FRINTLO-4euGIrh-nBCe1kGHiKsedwW7ulaWBPd3oFHoFQ6VBNVUSw0ctfSfIccocHFR7XUvQMZvr47prm-JzM>

HUD Housing Counseling Federal Advisory Committee (HCFAC) to host panel entitled “Challenges in Credit Reporting Post-Crisis: An Opportunity for Housing Counselors”

March 14, 2017 by · Leave a Comment 

As a member of the HCFAC committee which is comprised of three representatives each from the mortgage, real estate and housing counseling industries as well as three consumer advocates, I am learning more about a great resource – HUD approved counseling agencies. Panels were planned for March 14 at HUD to show different ways that HUD approved housing counselors can assist not only consumers, but also mortgage and real estate professionals. (The meeting was cancelled due to a major snowstorm and will be held at a later date.)

For years, we have grappled with a credit problem where past short-sellers who attempt to get approved for a conventional Fannie Mae or Freddie Mac mortgage are turned down because their short sale is credit coded as a foreclosure. This problem is commonly found during the mortgage process of a live contract where a deadline must be met. Often, options to get this corrected quickly are expensive or result in the borrower resorting to an FHA mortgage or a non-QM portfolio loan at a higher interest rate.

When this problem was discussed with colleagues in the housing counseling industry, it became evident that this is where a solution to this problem for all parties might be. Why? Loan originators are trained to meet contract dates and get data needed to ensure an approval. Housing counselors are trained to analyze and prepare clients for homeownership.

The credit code problem specific to short sales is not a singular issue. It starts with the realization that the short sale code is showing up as a foreclosure – something not visible until it is seen in both Fannie Mae and Freddie Mac automated underwriting systems. This doesn’t mean Fannie Mae and Freddie Mac are to blame for this problem – it’s just where it is first seen.

Unfortunately, for many affected past short-sellers they learn of this problem on their first attempt to get a new conventional mortgage when they are eligible again four years after the short sale. But too often, lenders don’t run these clients through the automated underwriting system upfront which would allow the lender to know there’s a problem right away. And consumers don’t always let the lender know they had a past short sale.

Note to all loan originators: ask your clients if they had a short sale up front! If they did, run them through your automated system immediately!

Calls for help often come in when the loan is in crisis. Lenders are instructed on how to do the Fannie Mae Desktop workaround, but if the lender is primarily a Freddie Mac lender, there is no workaround. And because of slight differences in the popular Fannie Mae Home Ready program and the Freddie Mac Home Possible loan, calls for help are increasing for how to fix this problem in Freddie Mac.

If past short-sellers know of the problematic credit code issue, they or a credit repair company attempt to get it corrected. The most common fix is to dispute the account. However, the dispute does nothing but hide the credit, offering a temporary fix that appears to work when credit scores increase. However, when the affected consumer applies for a new mortgage the dispute must be taken off of the credit. The previous credit code problem returns, credit scores plummet and if the consumer is in a contract, there is only one quick way to remedy the problem and that is with a Rapid Rescore. Per FCRA regulations, the lender must pay for the Rapid Rescore.

Another problem that occurs is that because of the dispute, the “date reported” becomes more recent then the short sale closing date because of the new investigation. This date can’t be changed per credit reporting agencies and the automated systems can deny a past short seller if this date is within the four year wait limit.

No lenders in the U.S. will do a manual underwrite to circumvent the problem, though both Fannie Mae and Freddie Mac have written criteria that allows for a manual underwrite.

Last week, it was found that the same credit code problem appears to also affect those who had a modification and are over 120 days delinquent.

It is a hunch that going over 120 days delinquent may be the key because an approval of a new loan was received for a consumer who was less than 120 days late on their mortgage prior to the short sale. Nonetheless, we are close to getting this resolved…. And the housing counseling industry will be involved in assisting in a permanent correction of this problem.

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