Thank You!

Thank You’s to Those Who Have Helped!

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…”

For Short Sellers, Some Good News
Kenneth R. Harney, Washington Post – Sept. 6, 2013

Policy changes by two of the biggest players in the mortgage market could open doors to home purchases this fall by thousands of people who were hard hit by the housing bust and who thought they’d have to wait for years before owning again. Read More


Short Sales may be Treated like Foreclosure by Credit-Reporting Agencies
Kenneth R. Harney, Washington Post – May. 17, 2013

Are large numbers of homeowners who have negotiated short sales with lenders at risk because of a startling omission in the American credit system? Do their credit reports and scores indicate that they were foreclosed upon, rather than having negotiated a mutually agreeable resolution with their lender? Read More


A Public “Thank You!” to Fannie Mae and a Request for Conventional Hardship Counseling Certification for Past Short Sellers

Dear Mr. Watts;

First, Thank You to Fannie Mae for the August 16, 2014 Desktop Originator [1]”fix” that provides  for past short sale credit reported as a FORECLOSURE to be corrected! This allows thousands of eligible past short sellers to  re-enter the housing market!

There is another problem we need your help with: confusion of real hardship with strategic default.

Underwriters are now reviewing more borrowers  who had a past short sale. Many underwriters have a problem with the fact that the mortgage was on time and then all of a sudden went delinquent right before the short sale and  assume these folks were strategic defaulters. However, an overwhelming majority of underwater homeowners were told by their lenders that they could not receive help unless the mortgage was delinquent. A massive number of short sellers will tell you they went delinquent because it was the only option given to them by their lender to get a short sale approval. Further, it can be proven that a massive number of these folks stayed in their homes until they could not do so any longer.

Staying current was a struggle. Hardship is what forced the short sale.

In the midst of  the worst recession in U.S. history, many underwater homeowners wiped themselves out, emptying 401K’s and savings to stay afloat. The hardship was the circumstance that occurred when these folks were at the end of their rope, and had no option left except to short sale.

And, yes, there were those who took advantage of the system. But the great majority continued to make payments, expecting to gain back equity and eventually move on. However, there are areas across the U.S. where appreciation has not happened fast enough and life events have resulted in continued short sales for underwater homeowners (approximately [2]9.1 million per RealtyTrac in July  of 2014).

FHA has “Back to Work” Certification

The Federal Housing Authority (FHA) has a [3]”Back to Work” program, where those who have had a past short sale, foreclosure or bankruptcy can get a certificate from a HUD Approved Counselor where hardship existed and where  a 20% reduction in income was sustained for 6 months or more. In acceptable circumstances, a new FHA mortgage can be approved one year after the short sale, foreclosure or bankruptcy as another option to the three year wait required now.

Could FHFA allow a Hardship Certification from a HUD Approved Counseling Agency or Private Mortgage Insurance Company (PMI) for conventional mortgages?

Why? Because underwriters unfamiliar with problems surrounding short sales are turning down qualified conventional borrowers with extenuating circumstances at the two year mark after a short sale.

Real Hardship Examples

A husband loses his job after a brain aneurysm. The medical crisis causes the couple to file bankruptcy, but they continue to pay the mortgage on the wife’s salary alone. Soon, it is evident the husband will no longer be able to work. It takes 18 months to get Social Security Disability for him and the underwater home is put up for a short sale. The short sale takes almost two years with two contracts that fall apart due to the lengthy short sale process.  The employed wife struggles to make the house payments, wiping out the 401K’s of both her and her husband. The wife is told she must go delinquent in order to get a short sale approval, so she does. Two years later, the wife attempts a new mortgage. The underwriter turns her down, stating she made the mortgage payments after the bankruptcy. The wife asks, “how hard does my hardship have to be?”

Another couple kept their underwater property as a rental. Both moved to another state for jobs, rented out their home and paid monthly for  the difference between rent received and the mortgage payment. 401K’s and savings reserves were wiped out to cover the difference of funds needed. When they lost their final tenant, the options were to short sale or go into foreclosure, as all funds were depleted. They short sold the property.

Please allow trained HUD Counselors or PMI Underwriters to provide a certification for hardship to prove Extenuating Circumstances.

Lenders will not approve a short sale unless a hardship exists. Questioning hardship requires that borrowers must revisit a difficult time all over again. Allowing those trained with allowable criteria to determine real hardship and provide borrowers with an option to layout their story to an unbiased third party can make a difference in the growth of the housing market.


Pam Marron NMLS#246438

Florida Mortgage Broker


[1] Desktop Originator/Desktop Underwriter Release Notes/DU Version 9.1 August Update/June 17, 2014
[2] U.S. Homes Underwater Stalls at 9.1 Million in Second Quarter as Home Price Appreciation Slows in Many 24, 2014/RealtyTrac           
[3]Back to Work Program: Get Your Certificate



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.!

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.