My Fannie Mae loan nightmare

Q: I have had my home for four years. I lost a job, which put me behind. This year, I was offered a Fannie Mae loan that brought me current -- I signed the documents and everything -- and I have been paying my loan on time for nine months.

Then my mortgage company called to tell me that my loan is "no good" and I will need to fill out and be approved for a different loan. I have been calling them back for two months now, and no one will call me back or give me any answers. Every time I call, they say it is being reviewed by upper management.

I do not know what to do from here. I have loan documents saying I have a loan, but both my credit report and my loan statements show that I am still in foreclosure. What happened here? What should I do going forward?

A: My friend, you are in a pickle. There might be no person on the planet who truly knows what exactly went wrong with your situation. I will hazard a guess, though, that some underwriter or funder or auditor noticed something about your file that did not, in fact, meet Fannie Mae's guidelines for that program. And it sounds like they noticed it extremely late in the game, perhaps even so late that they have no legal route to undo your loan, unless you simply acquiesce.

Here's how the process works: You apply for the program, or your lender's loss mitigation department pulls out all the files that might qualify. Your debt, income, assets and credit are reviewed, and your outstanding mortgage balance is compared to the current market value of your home.

This is the underwriting process, and it goes through several phases, but virtually every major loan program guideline must be met before loan documents are drawn up.

The "docs" are drawn, you sign them, and then another underwriter called the funder reviews the entire file again to be sure that the loan meets Fannie Mae's guidelines, most often because the lender's intention is to sell the loan to another company who buys Fannie Mae-insured loans and recoup monies to make more loans.

Either the underwriter or the funder can stop the loan process dead in its tracks before it closes. But once it's closed -- it is a done deal. You and your lender have a binding contract with one another, and neither of you can go back on your word without incurring major consequences. ...CONTINUED

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