Many people who sold their home in a short sale are having problems getting back in the market due to the fact that their credit reports and scores indicate that they had been foreclosed on. This is preventing many from being able to qualify for a home loan and mortgage even though they may have cleaned up their credit and have twenty percent cash aside for a down payment. How and why is this happening?
The current credit reporting system does not have a code that distinguishes a short sale from a foreclosure. The code only shows that a home was foreclosed on and not sold in a short sale. This doesn’t seem quite fair and is being investigated by the Federal Trade Commission and the Consumer Financial Protection Bureau. Sen. Bill Nelson, D-Fla, requested that the FTC and CFPB investigate the issue and penalize any responsible parties if they do not fix the coding issue within 90 days.