GSEs Announce Short Sale Changes
On August 22, 2013, Fannie Mae announced updates to its automated underwriting standards to fix problems with credit reporting of short sales. NAR heard from members, lenders, and representatives of a credit reporting association that Fannie Mae was denying credit to borrowers who had completed a short sale and had waited the required number of years to re-qualify for a new mortgage. Fannie Mae's underwriting system was indicating that the borrower had been through a foreclosure, rather than a short sale, which requires a longer waiting time for otherwise qualified borrowers. NAR continued dialogue with lender partners, Sen. Bill Nelson (D-FL), and the Consumer Financial Protection Bureau to find a solution to the problem. Fannie Mae's fix will allow lenders who receive a false foreclosure alert to manually enter into the system that a short sale was completed instead. Otherwise qualified borrowers will now be approved for a loan if the lender documented that the short sale took place rather than a foreclosure. For more information, see Fannie Mae's August 22nd update.