07 Oct Fannie Mae Rectifying Software Glitch for Short Sales
In the wake of the housing crisis, short sales became a common way for home owners to avoid losing their homes. Those who could no longer make their mortgage payments were able to work with lenders to sell their home at a loss. Many home owners took advantage of the process because short sales have less of a negative impact on your credit score than a foreclosure. However, because of a Fannie Mae software glitch, some short sale home owners say their credit scores have been impacted negatively.
Senator Bill Nelson, a Democrat from Florida, is leading the effort to correct the issue, and his focus has a lot to do with the state he represents. Florida was one of the hardest hit during the housing crisis and faced some of the highest foreclosure and underwater rates in the country. His hope is to bring some relief to his constituents along with other affected Americans.
Fannie Mae says their software does not offer a “short sale” label, so many accounts have been labeled as foreclosures incorrectly by the GSE. Some home owners have incurred additional penalties as a result, but Fannie Mae says they are in the process of remedying this problem.
According to Nelson’s office, Fannie Mae should have a fix in place with their software by Nov. 16. Consumers who have been negatively impacted by this software issue can contact the CFPB website to file a complaint.
The mislabeling of a home owner’s account as a foreclosure instead of a short sale can affect a person’s credit. Foreclosure can prevent buyers from obtaining another mortgage for nearly seven years, while after a short sale, a borrower only has to wait two years before they can apply for a mortgage again.
Nelson added: “Regardless of the cause, I’m glad Fannie Mae is fixing the problem. You can’t punish home owners who went upside down solely because of the economic downturn and loss of value in their home.”