BGS3 Lessens Credit Damage to Owners
BGS3 is once again expanding its operations in response to recent developments in the world of short sales.
The move comes in reaction to Fannie Mae's changes to its policies on bankruptcy and foreclosure, as well as a new policy addressing pre-foreclosure sales. Both changes affect all loan applications dated on or after Aug. 1. BGS3, through its short sale system, is helping homeowners avoid additional years of credit woes, according to Charles Cease, chief operations officer at BGS3.
"Depending on the course of action that a homeowner takes, the differences and ramifications to the homeowners future borrowing status are substantial," he said.
Under the new foreclosure policy, the time period a borrower must take to rebuild his or her credit has been extended to five years, and several new requirements now apply after five years and up to seven years after the completion date. The company said this makes foreclosure more damaging to a homeowner's creditworthiness than bankruptcy, which requires a four-year time period applied from either the discharge date or the dismissal date. Even in the event that the homeowner offers a deed-in-lieu of foreclosure, it still requires a four-year time period before they are eligible to get a conforming loan again.
A deed-in-lieu of foreclosure also includes additional requirements applied after four years and up to seven years following the completion date. In the event of a pre-foreclosure short sale, where the homeowner is willing to let their house sell for less than the amount owed, Fannie Mae only requires a two-year time period for re-establishing credit. Kenneth S. Lewis, co-founder of BGS3, said the company has known for quite some time that this news was coming. "These changes made to Fannie Mae's policies clearly express why foreclosure is worse for the homeowner's credit than bankruptcy, or a deed-in-lieu of foreclosure." (c) 2008 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com/ http://www.sourcemedia.com/