Pasco man gets around home lending glitch - WFLA News Channel 8

Pasco man gets around home lending glitch

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PASCO COUNTY, FL (WFLA) -

In 2010, George Albright's Trinity home lost half its value, and he lost income. His lender agreed to allow the house to sell for less than Albright's mortgage and write off the rest. This foreclosure alternative is supposed to help distressed homeowners get back on their feet.

Albright knew the short sale would be a black mark on his credit, but he wanted to buy a home again in a few years.

"The bank approved it, so I thought I'd be okay in a couple of years and get back in the market."

One of the benefits to a short sale is that most lenders require only a two-year waiting period before you can buy again. A foreclosure, on the other hand, sticks on your credit report for seven years. But Albright, and thousands of others who have waited their two years, are finding that a computer glitch resulted in foreclosure, the "kiss of death" in lending, on their credit anyway.

"Again, I thought I did the right thing, and I'm getting linked in with other foreclosures, and I didn't think that was fair because I thought I did the right thing, as best I could at that time."

The problem is that credit agencies don't have a code for "short sale" and so many just mark foreclosure. Fannie Mae is working on a fix to its computer system that would flag this problem. The new system is supposed to launch Nov. 16. In the meantime, the Federal Housing Administration is working to change its guidelines, too.

Instead of waiting three years for an FHA loan, a distressed seller can now jump back into the market after one year of good credit.

Until all of the computer fixes are in place, experts recommend obtaining a letter from your former lender to prove your short sale situation.

This is what Albright did, and now he has been approved to buy a home again.

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