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More and more short sales are turning up as foreclosures on credit reports. The issue caught the attention of Senator Bill Nelson who this week asked for a federal investigation into why the mortgage industry does not have a separate credit reporting code for short sales.
Like some of his Trinity neighbors, George Albright unloaded his underwater two-story thru a short sale. A short sale damages credit versus a foreclosure that slashes consumer scores.
It's been more than two years since Albright sold his home, and now's he ready to buy again, but can't. It’s showing up as a foreclosure on his credit.
Veteran mortgage broker Pam Marron found it's a scenario repeating itself over and over again. Short sellers discover they can't get back into the housing market because their credit report shows a foreclosure.
Why? The banks and credit bureaus have no special code to report a short sale, according to Marron, who recently traveled to D.C. to educate lawmakers and lobby groups like the Consumer Protection Bureau to do something about the glitch that could affect many.
Experian says the problem is not theirs. In an email, a spokesperson explained. "The short sales and foreclosures are being coded correctly on Experian’s credit reports. Where we have found the discrepancies occurring is in the underwriting process."
Short term, Marron says, short sellers must demand a letter from their lender that states that the property closed is a short sale and any marking of a foreclosure should be deleted.
Source: www.ABCActionNews.com By: Jackie Callaway