Pam Marron Home Lending

2 Current Fixes for Foreclosure Code on Past Short Sale Credit

Two Fixes Already Working for Past Short Sellers Getting Denied for a New Mortgage Due to Erroneous Foreclosure Code on Past Short Sale Credit!

Most past short sales are being coded as a “foreclosure” which results in a “Refer with Caution” or denial through Fannie Mae’s Desktop Underwriting (DU) engine, and a “Caution” or denial through Freddie Mac’s Loan Prospector (LP) engine.

* If a past short sale is over 4 years, the coding problem does not normally exist in the Freddie Mac LP engine.

 Many of you are already trying to get a mortgage approval and are receiving the automated underwriting denial from your lender for a conventional loan even though eligible. Try these two solutions which seem to be working right now:

 1. “Submit a Complaint” at CFPB.gov.

CFPB Bank ltr pg 1

bank ltr pg 2

Bank Ltr pg 3

bank ltr pg 4

 bank ltr pg 5

      • Additionally, here is what the CFPB response from your lender may look like:

Kelly CFPB letter

 2. Call your past short sale lender and ask for the “Executive Mortgage Complaint Escalation” phone number. Call this phone # and ask for a letter stating that your past mortgage closed as a short sale. 

      • Have your HUD-1 Closing Statement and the short sale approval letter(s) for the 1st (and 2nd ) mtg. ready upon this call. Make sure to ask how long it will take to get this letter.
      • Here is what this letter from your lender may look like:

 Bank letter

      • Forward the resulting letters from CFPB and your past short sale lender to your new mortgage lender and ask them to re-pull a new credit report.
      • IMPORTANT: Ask your lender if they can pull credit through Kroll Factual Data or Acranet. I am having varying results with varying credit agencies and the greatest success has been with both of these agencies. Their contact information is under Find Help, then Credit tab on this website.
      • Then, have your lender rerun your loan with the new credit report through Fannie Mae Desktop Underwriting. This results in an Approve/Eligible, or an Approve/Ineligible that can be fixed with proof of the short sale date.
      • FHA and VA loan approvals are not commonly resulting in loan denials for past short sellers through eitherFannie Mae DU or Freddie Mac LP systems.