Daily Real Estate News | Tuesday, October 23, 2012 Mortgage giants Fannie Mae and Freddie Mac have issued new rules, which will take effect Nov. 1, that will allow short sales for underwater borrowers who have never missed a mortgage payment. Previously, Fannie and Freddie allowed only home owners who had missed payments to qualify for a short sale.
Eligible borrowers under the new rules will need to show a hardship to qualify for a short sale, however. Hardships may include unemployment or a death of a spouse.
Inman News points out one potential flaw to the new rule, however: The nondelinquent home owners who undergo a short sale will likely take just as big a hit to their credit score than if they had missed loan payments and gone into a foreclosure.
“Under current national credit reporting practices, those nondelinquent borrowers are likely to be treated the same for credit scoring purposes as severely delinquent owners who go to foreclosure after months of nonpayment, or who simply toss back the house keys and walk away in strategic defaults,” writes Ken Harney for Inman News.
Credit agencies use no special coding to indicate that a short sale was without delinquency. Therefore, home owners could see their credit scores drop 150 points or more after the short sale.
However, officials at the Federal Housing Finance Agency, which oversees Fannie and Freddie, told Inman News they are “in discussions with the credit industry” to explore ways to fix the credit score problem for those who haven’t missed a payment but undergo a short sale.
Source: “Damage to Credit Scores Could Trip Up New Fannie, Freddie Short Sale Program,” Inman News (Oct. 23, 2012)
Last night we celebrated the last 9 weeks of learning and living in community together. The lesson on the power of generous giving was heartfelt and led to amazing discussion. During the 9 weeks this class became our "Monday Night Family". We laughed, learned, and cried together. We celebrated each other’s successes and carried each other’s burdens. We had an amazing spread of food from meatballs to spinach dip and most everything in between. The sense of Hope in the room was palpable. Last night we focused on living for others and the power of intentional giving. I've attached a copy of a "snapshot card" I received last night to the left. The check box "giving for the first time" blew me away. The power of the Holy Spirit was at work in people. I saw many boxes checked indicating they were giving substantially more as well. This was all before the giving lesson! Let me be clear, this is not about the money, God doesn't need our money. It is about what the act of giving does to transform us. That transformation was powerful to see last night as we talked and shared our experiences in this area. I heard stories of marriages strengthened, singles empowered, and hope restored last night. Some of the numbers / statistics from our class: $703,764 in debt amongst 20 families for an average of $35,188 per family. During the last 9 weeks over $25,000 in debt was paid off, over $15,000 in cash saved and over 20 credit cards cut up! WAY TO GO EVERYONE.
It's been an honor and a privilege to walk with during the last 9 weeks. Please stay in touch via the facebook FPU page or email, or stop in and say Hi. Your all now empowered ambassadors of Biblical financial truths and the power of applying them over time. Look what you did in 9 weeks, imagine what you can accomplish in 9 months, 9 years. Share your story and pay it forward. dave
Dave Smith is part of the KCC finance staff and a Dave Ramsey Certified Coach.