Awareness and Help for Problems that Originated Out of the Housing Crisis

Foreclosure code is still being applied to mortgage credit of many who have had a short sale, modification, sometimes a deed in lieu and even when none of the latter experiences exist. The common thread when the foreclosure code exists is that mortgage delinquency exceeded 120 days. A foreclosure code results in a seven year wait for a new conventional mortgage rather than the four year wait required after a short sale or deed in lieu, or a one year wait required after a modification.

A new service located at (ph#1-866-702-4551) was originated to assist those that have had a past short sale, deed in lieu or modification to find out if their credit is coded as a foreclosure… before they purchase again. This service was needed to assist clients with a past short sale, deed in lieu or modification before a contract is signed. WHY? The foreclosure code is not visible on a credit report and is not found until a conventional loan for affected borrowers is run through the Fannie Mae and Freddie Mac automated underwriting systems… Which is often mid-contract.

On a conventional mortgage, there is a workaround for the foreclosure code in Fannie Mae. Freddie Mac programs have grown in popularity due to unique underwriting criteria, but there is no workaround for the foreclosure code. This is causing denials that result in loss of Freddie Mac market share, a switch to Fannie Mae or FHA loans or portfolio conventional loans at higher interest rates with greater down payment, and in many cases, a loss of contract because sellers can’t wait.

Homeowners who have negative equity but are trying to “stay put” awaiting equity to return are locked out of the refinance market if they have a portfolio (non-Fannie Mae/non-Freddie Mac) conventional first mortgage over 95% loan to value or that is combined with a home equity line of credit (HELOC) where the combined loan to value exceeds 95%. Many HELOC’s are interest only and a huge number of them are now resetting to full principal and interest payments with balances spread over the remaining time frame of the initial loan! For HELOC’s that contribute to the negative equity, there is no refinance, and this can also cancel the ability for the homeowner to get a refinance of their first mortgage. A modification is the only option provided by lenders when negative equity exists, and mortgage delinquency and proof of hardship is most often required.

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