Thank You, National Consumer Reporting Association!

Error of foreclosure placed on past short sale credit found in credit report code!

Renee Erickson, Acranet credit/NCRA board member, got the ball rolling….

Terry Clemans, NCRA Executive Director, wrote about this and took a group to Washington, D.C. to meet with U.S. Senator Bill Nelson, the Consumer Finance Protection Bureau (CFPB), and Director, Richard Cordray. 

Brian Webster, who was put in charge of getting the problem fixed. Mr. Clemans, and the NCRA also worked with Fannie Mae.

The NCRA has 64 credit reporting agencies across the U.S. that work with mortgage companies and consumers to “get credit right….

“Thank you, National Consumer Reporting Association, and for your continued efforts to help consumers…”


NREP: What has credit got to do with Boomerang Buyers? EVERYTHING!

National Real Estate Post explains credit scores and 7.3 million Boomerang Buyers who may be getting back into housing.
2/4/2015: http://thenationalrealestatepost.com/…


How the Consumer Financial Protection Bureau Helped!

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The erroneous foreclosure code on past short seller credit was taken to the Consumer Financial Protection Bureau (CFPB). Senator Bill Nelson of Fl. demanded that the problem get fixed as it was affecting the state of Florida in a big way. The CFPB worked with Fannie Mae on a solution that came out on Nov. 16, 2013, but it did not work.

So, complaints started being placed with the CFPB on banks that would not change the credit code to other than a foreclosure….. and it worked!

It was also learned that in fact the code could be changed! On August, 16, 2014, Fannie Mae came out with a second workaround and changes have bee evident since then. The problem is still in the Freddie Mac system, but hopes are this will be corrected soon. Thank you to the Consumer Financial Protection Bureau (CFPB), Brian Webster with the CFPB, Fannie Mae, Senator Bill Nelson who got the ball rolling and pushed hard to get this problem resolved, and the National Consumer Reporting Association who took this to the CFPB in the 1st place and whose 64 members have been working diligently with mortgage consumers across the U.S.!


Hero… U.S. Senator Bill Nelson (D-FL) May 7, 2013

On May 7, 2013, Senator Bill Nelson of Florida took the problem of short seller credit being erroneously coded as a FORECLOSURE to the Senate hearing on “Credit: What Accuracy and Errors Mean to Consumers.” Senator Nelson is a true hero… and took on the problem of short sale credit erroneously coded as a foreclosure that resulted in a mortgage denial for eligible past short sellers. He demanded that the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC) get this problem fixed in a Senate hearing on May 7, 2013. The Consumer Data Industry Association (CDIA) was also included in that hearing.


FORECLOSURE code did not affect FHA or VA

The FORECLOSURE code did not affect FHA or VA loans due to the Total Scorecard secondary automated underwriting system that runs parallel to the Fannie Mae and Freddie Mac automated system. Total Scorecard allows an approval but designates there may a property in foreclosure and requires that this be checked in underwriting.


How the National Consumer Reporting Association (NCRAinc.org) got involved!

We worked with Renee Erickson, of Acranet and a NCRA Board member, to show where past short seller credit was showing up as a FORECLOSURE even though the consumer had proof of past short sale. This resulted in denial in both Fannie Mae and Freddie Mac automated underwriting systems. Renee took this to the NCRA (National Consumer Reporting Association).


Short Seller Credit Rebounds – Automated Error Confusion Persists

Short Seller credit is often surprisingly good, in spite of late payments required by their lender for the short sale. Loan files were acceptable for a new loan per Fannie Mae/Freddie Mac guidelines; yet both automated underwriting systems were turning past short sellers down and showing the short sale as a FORECLOSURE! And, there was a reluctance to downgrade the credit from a FORECLOSURE, even with proof in hand!


Confusion about Short Sale: LENDERS require delinquency, but CREDIT IS IMPORTANT to homeowners!

“One time life event mortgage defaulters are vastly different than chronic mortgage defaulters,” states the May, 2011 Financial Summit/TransUnion/Life after Foreclosure and Hidden Opportunities article.  

Judgment en-masse… how could people undergoing such hardship  have credit that seemed to be intact? And if credit was intact, these homeowners must really be strategic defaulters.

The reality was that short sale lender policy required mortgage delinquency in order to get short sale approval… then… and most still require delinquency now. And homeowners were wiping themselves out financially and feeling humiliated that they had not seen this coming. 

 The common thread in hundreds of cases we have worked on can prove that homeowners did everything that they could to stay afloat and hang on – until they could not any longer. Credit was of utmost importance to the overwhelming majority of the homeowners who were affected by short sale.


The Root of Problem: Lender required delinquency policy needs to be changed!

Loss mitigation practices for most investors require mortgage delinquency for a short sale approval in the first place and that policy continues today.

If underwater homeowners were given an option to stay current through the short sale process, lenders would receive a greater net amount for the property.

If given the option, homeowners would stay current to keep credit built over a lifetime intact, even with hardship.

That is how important credit is to these consumers. Credit is the benchmark for the mortgage industry. This policy is knowingly destroying consumer credit and needs to be changed!