The Long & Short: The Business of Short Sales
Policymakers: Pay Attention! Short Sale Credit Code Error Keeping Millions of Past Short Sellers Out of the Housing Market By Pam Marron
MAY 2014 n Mississippi Mortgage Professional Magazine n
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four weeks. This release is flexible enough to connect any financial institution to any third party provider of appraisal and property valuation services. It also provides users collateral valuation reports as well as the supporting data in the MISMO industry-standard format. “Our latest version of DirectConnect offers mortgage lenders, bankers, credit unions and other financial institutions a comprehensive yet practical solution for ordering and delivering property valuations,” said Roger Beane, CEO of LRES. “The benefits of using this technology can be leveraged into a competitive advantage by organizations that value automation, speed, efficiency and accuracy in an increasingly competitive marketplace.”
A huge number of eligible past short sellers are ready to come back into the housing market, but they are being locked out because their short sale is being credit coded as a foreclosure. This code error issue is causing those eligible for a conventional mortgage two years after the short sale to wait seven years, instead. And, many who were approved for a short sale but were required to make payments on deficiencies and settled with their lenders, are having far worse troubles. Not only do they have to deal with getting the foreclosure code off, but their deficiency shows as a new loan, often as “charged-off,” and the “date reported” pulls forward making Fannie Mae and Freddie Mac automated systems think the short sale just occurred. Massive numbers of past short sellers who are encouraged by an improving economy are coming back into the housing market across the United States. Many are told by new lenders that Fannie Mae and Freddie Mac short sale guidelines allow them to get a new mortgage again: Two years after the short sale through Fannie Mae’s automated system or four years later through the Freddie Mac system. But shocked consumers are being told they are denied a new mortgage often days before the loan closing. The denial is clearly visible on Fannie Mae or Freddie Mac automated system findings, but only the Fannie Mae findings state which account is causing the problem. Even when proof of the short sale is produced directly from the short sale lenders, the foreclosure code is not changed. A solution to get a universal specific short sale credit code has been pushed for the last year, but continues to be ignored at the highest levels, even though many short sale lenders, frustrated that they can’t help these consumers, also state, “There needs to be a specific short sale credit code.” This problem has been known for a few years, and on May 7 of 2013, U.S. Sen. Bill Nelson of Florida brought the problem to the attention of a U.S. Senate Committee meeting and instructed the Consumer Financial Protection Bureau (CFPB) to get a fix within 90 days. Initially, the problem was thought to be in the Fannie Mae underwriting system, so the CFPB worked with Fannie Mae on a solution that would have allowed lenders who had proof that the foreclosure was a short sale to go into the Fannie Mae system and fix it. However, this did not happen. Instead, lenders must receive a message from Fannie Mae on the findings that allow the lender to then go into the system to make the change, rather than the lender notifying Fannie Mae of the error. And, only a few specific credit code combinations will trigger the message. Lenders who clearly have proof of a short sale are given no opportunity to make the correction, and the Fannie Mae message allowing entry only comes occasionally. Estimates of how many past short sale cases are getting through the Fannie Mae system have been reported on 30 percent of the cases received since Nov. 16, 2013, when the “fix” was put in place in the Desktop Underwriter/Originator system. Thirty percent of all cases or 30 percent of short sale error cases … is this acceptable? On April 9, 2014, Sens. Elizabeth Warren (D-MA), Brian Schatz (D-HI), Sherrod Brown (D-OH), Bernie Sanders (I-VT) and Richard Blumenthal (D-CT) introduced a bill called “The Secure Act” to protect consumers from credit errors. Though this bill has been introduced at the end of a congressional session, pay attention, and if you are having this problem, get in touch with your senator and all of these senators and let them know this is happening across the U.S. Initially, this was thought to be a Fannie Mae automated system problem, but the problem is also in the Freddie Mac system. It is not the fault of either Fannie Mae or Freddie Mac, but was simply able to be seen in their systems. This is a credit code issue that needs to be corrected.
Applied Business Software (ABS) has introduced The Loan Office, designed for smaller lenders, and ideal for managing loans, collecting payments, paying investors, printing statements and much more. ABS has been creating versatile solutions for private lenders, investors, brokers, mortgage lenders, attorneys, loan originators, fund administrators, note buyers, accountants, non-profits and municipalities for more than 35 years. Some of the software’s features include QuickBooks integration, letterwriting, conversation log, fully integrated document imaging and management system, contact management, reminder system, user defined fields, RESPA compliant escrow administration, unlimited unpaid charges per loan, payment processing (NSFs, payoffs, etc.), comprehensive year-end tax reporting (1098s, 1099-INTs, Canadian T5s), built-in financial calculator, context-sensitive help assistant, and a minimum 11 hour a day software support. ABS says The Loan Office is the answer for small lenders and their need for powerful, flexible, compliant, and affordable software. “There has always been a need for powerful software for smaller lenders, and we understand the economics for small businesses when making these decisions,” said Jerry Delgado, CEO of Applied Business Software. “The Loan Office fills that gap. It allows customers to start out with an affordable solution, and then upgrade later to our larger enterprise, multi-module software The Mortgage Office as their business expands and grows.”
Pam Marron is senior loan officer with Bankers Mortgage of Pasco County. She may be reached by phone at (727) 375-8986 or e-mail pmarron@tampabay.rr.com.
DocuSign Inc.’s launch of its Digital Trans-
ABS Develops The Loan Office for Smaller Lenders
DocuSign Unveils Latest Digital Transaction Management Platform
action Management (DTM) platform for brokers, DocuSign for Real Estate Broker Edition, is successfully bringing small, medium, and large brokerages into a 100 percent digital future. The latest DocuSign For Real Estate Broker Edition solution adds deeper transaction room functionality with real-time visibility, reporting, and document checklists that make managing a real estate brokerage easier, more compliant and more secure than ever– enabling brokers to manage their business from anywhere, at anytime, on any device. DocuSign for Real Estate Broker Edition offers real estate brokers a simple way to manage multiple offices with a single, unified dashboard report of transaction activity. It has already been enthusiastically adopted since its release in February by more than 120 brokerages representing more than 13,000 agents. “DocuSign is the industry standard in real estate because it is the easiest and most secure DTM platform to manage transactions,” said Jimmy Dulin, brokerowner of RE/MAX Ability Plus in Carmel, Ind. “DocuSign has helped us be a more efficient, effective and ‘green’ brokerage so our agents can focus on creating a great experience for their clients without the hassles, costs and impact of having to print, fax, scan, overnight or drive around town to close a deal.” DocuSign for Real Estate Broker Edition includes new features to help brokers and their agents close deals faster, increase security and control in every transaction, and create a better agent and client experience alike, including: Enhanced Transaction Rooms; Broker Team Management Tools; and Improved Compliance. “The interest, adoption and momentum we are seeing around our Digital Transaction Management platform and Transaction Rooms among brokers has been tremendous,” said Tom Gonser, founder and chief strategy officer, DocuSign. “Like in many other industries, DocuSign has become the catalyst that’s helping brokers make the digital transformation in their businesses. DocuSign is creating a better experience for everyone involved in the real estate transaction– from buyers and sellers, to agents, loan officers, inspectors, and more.”
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