Pam Marron Home Lending

Why Solutions?

Short Selling and Keeping Credit Intact,

Repurchasing After A Short Sale,

OR 

Gaining Equity Back 

If You Are Underwater

and

Want to Stay!

 

Why Solutions?

          Many have asked why finding solutions to help short sellers re-enter the housing market is so important.

Here are the troubling facts:

          1. En-masse requirement of lenders to required underwater homeowners to default in order to get a short sale approved is destroying the credit of past short sellers.
          2. The total number of underwater homeowners across the United States that are still underwater is estimated to be approximately 12 million.
          3. The number of past short sellers that are now eligible to re-enter the housing market is estimated at 2.2 million, per Realty Trac.
          4. A great majority of short sellers have good credit before and after the short sale. The “credit problem” starts with late payments that underwater homeowners are required to make even after the 11/1/12 New Short Sale Guidelines issued by the Federal Housing Finance Agency (FHFA) stating short sellers can now be current with an acceptable hardship in order to get a short sale approved.
          5. There is no credit code for a short sale. Instead, short sales are commonly coded as a pre-foreclosure or foreclosure. So, even after the allotted wait timeframe before getting another mortgage, past short sellers are turned down for a conventional mortgage through Fannie Mae and Freddie Mac automated underwriting systems (AUS).
          6. The erroneous coding of a short sale as foreclosures appears to be known to the banking/lending industry, yet there is little attention given to the correction, and even more alarming, the destruction of credit that it causes. The foreclosure code is not often recognized until the past short seller applies for a new mortgage and the Fannie Mae or Freddie Mac automated underwriting systems picks up the past short sale as a foreclosure seen on underwriting findings. The root of which repository the problem stems from is typically not recognizable on the initial credit report and must be located within raw data seen at the credit reporting agency. There is concern for possible denial of credit other than the mortgage that this code may also present for the past short sale consumer.
          7. By accident, it was found that this incorrect coding can also preventing underwater homeowners who stay in their homes but apply for a refinance, from getting approved for the refinance.
          8. The erroneous foreclosure code prevents a homeowner from getting a conventional mortgage for 7 years, rather than 2 years minimum required for a short sale.
          9. In Tampa Bay, Florida alone, 29% of the tri-county area closed sales were short sales in Q2 of 2013. This code problem potentially “locks out” the 29% of past short sellers from repurchasing another home for up to seven years.
          10. Lenders are ignoring FHFA guidelines effective Nov. 1, 2012 that allow underwater homeowners to proceed with a short sale while being current on mortgage payments as long as they qualify with one of the hardships listed on the August 2012 Form 710.
          11. This is a non-partisan problem, affecting many, though not all, states. It has been hard to keep the focus of this problem in the center. Credit is due to Senator Bill Nelson (D-Fl), the Consumer Financial Protection Bureau (CFPB), and the National Credit Reporting Association (NCRA) for their efforts to get this problem resolved. 

To Regain Equity to Stay in Underwater Homes:

There are many who want to stay in their homes even though their mortgage is more than the value of their home.

          • HARP (for Fannie Mae and Freddie Mac mortgage holders) and FHA, VA allow a refinance of underwater properties. Underwater homeowners can be shown when and how they will regain equity back with a refinance to a shorter term at lower rates.
          • The White House Refinance Plan was introduced last year for non-Fannie Mae and Freddie Mac mortgage holders that are underwater and want to be refinanced. This plan needs to be pushed and implemented as there is no refinance plan available for non-Fannie Mae , non-Freddie Mac underwater mortgages at present!

Be Aware…

What’s at Stake:

      1. the comeback of the real estate market
      2. Consumer credit negatively affected across the U.S., in a period when the U.S. economy needs help more than ever, and the unknown negative impact of the foreclosure code to other credit
      3. millions of underwater homeowners who are electing to stay in their homes and now can’t refinance to historically low interest rates
      4. 12 million (still) underwater homeowners and potential short sellers, “stuck”, and who need attention with solutions to move forward as best as possible.
      5. 2.2 million past short sellers who can now re-purchase a home 2 years after their short sale and with 20% downpayment, but are having difficulty due to the foreclosure code problem.

 

 

Committed to helping my customers achieve homeownership!