- September 5, 2013
- Posted by: Joel Firestone (G-Net Consulting)
- Category: News
Did you know…Starting mid November there should no longer be the need to beware of the number 9! Fannie Mae has announced that during the weekend of November 16th, they will be rolling out their Desktop Underwriter (DU) version 9.1 in which they have solved the issue of their software reading short sales as foreclosures.
Over the last couple of years this has been an issue that has affected thousands of borrowers. Lenders report MOP (method of payment) codes for accounts on consumer’s reports. The problem was that they do not have a different code for a short sale vs. a foreclosure when reporting a mortgage account. When the credit data was run through the automated underwriting system it would translate these codes as an account in foreclosure. Even if there was no foreclosure present, if the MOP code was a ‘9’, the system would pick it up as a foreclosure.
This fix was spearheaded by the NCRA (National Consumer Reporting Association) who brought it to the attention of Senator Bill Nelson (D) FL who spoke at a Congressional hearing in May on this subject. According to Senator Nelson and the Consumer Financial Protection Bureau, this practice “tainted consumer’s credit ratings, and potentially delayed by a number of years their ability to qualify for new loans on purchases like homes or cars.”
This resolution will come as a great relief to the great number of borrowers who would now be eligible for a home loan. Whereas, up to this point, they may have experienced delayed underwriting, higher fees and possibly even been denied due to the coding limitations of the credit bureaus and the shortcomings of Fannie Mae’s automated underwriting system.
You can read more in Fannie Mae’s Desktop Underwriter release notes here
If you have any questions, please feel free to contact: