Industry NewsMortgage

Damage to credit scores could trip up new Fannie, Freddie short-sale program

Regulators exploring fix to protect underwater borrowers who have never missed a payment
Published on Oct 23, 2012

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by CareyBot

Without some last-minute gymnastics, underwater homeowners participating in Fannie and Freddie's ambitious new plan to allow short sales by borrowers who haven't missed a loan payment could see their credit scores dented just as severely as if they'd gone into foreclosure after months of nonpayment.

For the first time ever, on Nov. 1 Fannie and Freddie plan to allow mortgage servicers to begin accepting short-sale packages from nondelinquent borrowers who can demonstrate hardships like the loss of a job or death of a spouse. Under previous rules, only delinquent homeowners could qualify.

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