I have a client that did a shortsale in 2008 with GMAC mortgage.  The credit reports shows that the property was closed as agreed upon. There was a full release shortsale letter from the bank.  Title was passed all was good.  The client bought a home with an FHA loan two years ago. Their credit is in the 700's now. But, they tried to buy a condo which is not fannie mae approved.  They wanted to do a conventional and on those you have to have desktop underwriting with Fannie Mae and Freddie Mac.  It popped up that GMAC had put in foreclosure then shortsale. The property never went to foreclosure. There was a conversation with the bank that took over GMAC with a rep from India (I think). He couldn't find the loan number, the client's name, or address on the GMAC mortgage. He said you have to send in a letter and they will have to do a merge of old files and try and find it. But, that the bank put in that the house was foreclosed first before the shortsale. The buyer cannot get the credit bureaus to fix this problem without a letter from the bank. They won't take the shortsale approval letter from 2008. Help, the buyers are going to lose the condo they want to buy.

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Wouldn't a copy of the property profile help? It should show that title was transferred  by your clients to the new owners since it was not foreclosed on.

I had the same thing happen with a client that did a short sale and Wells Fargo reported it as a foreclosure.  She spoke with Wells Fargo and was advised to sent them a copy of the approval letter and HUD which she did.  It only took them a few days and it was off her credit report. 

The HUD will 100% support that there was no foreclosure.

This is exactly why I send a reminder (60 days after closing) to all my short sale sellers to pull their credit reports (easily pulled for free) to be sure the short sale was reported correctly.  It is a whole lot easier to correct shortly after the closing than 2 years later.  Good luck!!

This is not uncommon on short sales done prior to 2009. The servicer codes the short sale wrong. You have two options, one is to get the letter from the bank and hope they can change the coding, but this may take 60-90 days. The second option is to find a lender who can manually underwrite a conforming loan. (essentially a lender who does not need a DU/LP automated  approval to sell the loan on the secondary market).  The credit bureaus cannot do anything in this situation. 

The seller needs to contact each of the 3 credit bureaus via letter and send in the short sale approval letter and dispute the claim of FC. Under FTC rules, the banks have to respond within 30 to 45 days or it gets deleted from the credit report. Tell them to get their credit report from each bureau, do their homework and find the addresses for the 3 bureaus, then write the letter to each of them.

Trying to get the bank to respond is like trying to find a needle in a haystack. Best to take control of their situation.

Prior the closing of a short sale and from 90 days after the mortgage was delinquent usually the records will show a foreclosure is in process. Some times the lenders do not update the records showing that the property closed as a short sale. That's probably what the rep is seeing. The lender trying to do the new loan have ways to have the records updated using the HUD from the closing and the approval letter. I'm a loan originator, let me know if I can help you.

The situation is fixed.  I thank all for their great ideas.  But, the loan Officer Nathan Davis of Community Lending worked hard on this.  The problem was that the lender is no longer in business.  We didn't have the time to deal with waiting 30 or more days.  But, he disputed this in all three credit bureaus and gave the short sale  approval letter, the Final HUD, the recorded deed and anything else he had and within one day the reports were corrected to show shortsale.  What they do is put in an F on the record which means foreclosure.  Because many times the bank is filing a Lis Pendens before closing.  What they need to do is change the code to FS.  Which means Foreclosure and finished as a shortsale.

Thank you to all of you intelligent agents and loan officers for your help.



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