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.Questions? Contact Pam Marron Today!