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.
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