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.
According to CNNMoney, some banks are in the process of paying struggling homeowners up to $35,000 to sell their homes before they wind up in foreclosure. The deals target homeowners who owe more on their homes than they’re worth, and the incentive is to sell their homes in a short sale.
This new tactic from the Banks is leaving many homeowners skeptical, having been rejected for a modification one day, and receiving a call offering cash upfront the next. Foreclosures have become an ever increasing expense for Banks like Chase and Wells Fargo, and the short sale is a faster, more efficient option than foreclosure. Homeowners have caught on to dragging out their cases for years on end, halting payments on their mortgages, property taxes, and the list goes on. Whether sellers can expect a check from their bank depends on a number of things including location, and the percentage of unpaid balance.