Just when you think you have all the bases covered in applying for your mortgage loan, Fannie Mae and Freddie Mac have added another stumbling block into the application process. Seems some unscrupulous individuals figured out that by disputing an account claim and having a notation added to your credit report removed that tradeline from being taken
into credit scoring consideration and thus was left out of the automated loan approval process.
Now, just exactly how they were getting these disputed tradelines on credit reports past the lenders underwriting process that is supposed to occur on all automatically approved DU or LP files, were not sure. Typically, if there is any question about a tradeline, an underwriter will request more information and require documentation to verify the veracity of the disputed account. But hey, in this day and age, we guess anything is possible.
So, to counteract this loophole, Fannie Mae and Freddie Mac are now rejecting mortgage applications with disputed tradelines in their automated approval process and requiring the files to be manually underwritten in order to gain an approval. The only problem with that requirement is “most” of the national lenders have quit doing “true” manual underwriting of loan files and simply just blames the problem on Fannie or Freddie. Thus, if you have a tradeline dispute, your file is now stuck in mortgage application limbo.
As with anything that has the federal government involved in the process, this is just another boondoggle that anyone with half a brain could easily resolve to everyone’s satisfaction. However, government regulations and congressional oversight have nothing to do with common sense when it comes to mortgage lending. Fannie and Freddie are aware of the problem, but I would not hold my breath as to when they may or may not address the issue.
Until they do, add another item to your list of potential mortgage application killers.
And so, the mortgage lending beat goes on.
Gulf Coast Associates, Realtors
Bonita Springs, Florida