Pam Marron

Transcription

1 p CASE STUDIES OF CONSUMERS WITH A PAST SHORT SALE, MODIFICATION, OR NONE OF THE ABOVE WHO ATTEMPT TO OBTAIN CONVENTIONAL FANNIE MAE OR FREDDIE MAC MORTGAGE FINANCING Abstract The foreclosure credit code that is applied to credit of consumers with a past short sale, modification or excessive late payments on a past mortgage prolongs the ability to obtain a new conventional mortgage after four years to seven years, the wait timeframe required after a foreclosure. Pam Marron pam.m.marron@gmail.com

2 Case Data Summary... 2 From author: Dissecting Detail of Data for Ten Cases... 4 Fannie Mae... 4 Freddie Mac... 5 Number of consumers at risk, HOW Problem continues... 7 #1 Short Sale... 9 #2 Short Sale...13 #3 Short Sale with Deficiency...17 #4 Short Sale with Deficiency...21 #5 Short Sale with Deficiency...25 #6 Short Sale...29 #7 Deed in Lieu...38 #8 NO SHORT SALE, NO DEED IN LIEU, NO OR MODIFICATION!...42 #9 Modification...51 #10 Modification

3 Case Data Summary Case# Short SS, DIL, Sale: SS MOD Deed in date Lieu: #1 pgs 9-12 #2 pgs DIL Modific : MOD SS 4/1/ Appr/ SS FICO FNMA FHLMC FHLMC mid AUS AUS with AUS with scorefindings trimerged credit In-File credit findings findings 7/30/ Appr/ Elig/ Eligible Caution Elig/ Eligible Caution Elig/ Caution Elig/ Caution Risk in Findings: Pre-Foreclosure (PFCL) Foreclosure (FCL) Charge-Off (CO) Deed in Lieu (DIL) noted in findings comment under FNMA: (Risk Elig.) FHLMC: (Credit Risk) FNMA: PFCL foreclosure FHLMC: FCL/w credit Infile submiss FNMA: PFCL FHLMC: FCL/w tri-merge &credit Infile submiss Highest Pymt History #/ Bureau 9-XP 9-XP Comments Acronym for: Fannie Mae: FNMA Desktop Originator: DO Acronym for: Freddie Mac: FHLMC Loan Product Advisor: LPA Acronym for both: Automated Underwriting System: AUS Bureau can also be called repository SHORT SALE FHLMC: Credit InFile: NO CREDIT FOR DELINQUENT MORTGAGE SHOWED UP. However, FHLMC support (3/24/17) stated this account showed up in RAW DATA and that EXPERIAN notes a mortgage delinquency for this file. Lender is unable to see this on printed credit In-File! FHLMC stated this could only be changed through Experian. SHORT SALE FHLMC & FNMA: 2 nd mtg. with Greentree Mtg. also paid off. However, does not show on CIC tri-merge credit, FNMA DO or FHLMC LPA tri-merge or credit In-File. #3 pgs SS 12/13/11734 Appr/ Elig/ Eligible Caution Elig/ Caution FNMA: PFCL FHLMC: FCL/w tri-merge & credit Infile submiss 9-XP SHORT SALE ON 2 ND MORTG ONLY FNMA & FHLMC: Date Reported moved up to 6/13 when short sale deficiency paid off, 18 months after 12/11 short sale closing.! Note: this is a major lender employee. #4 pgs SS 8/5/ Appr/ Elig/ Eligible Caution Elig/ Accept FNMA: PFCL FHLMC: FCL/w tri-merge 4-TU I5-LPA trimerge SHORT SALE Date Reported on Chase and Wells Fargo Home Equity both show more recent date than short sale date (8/5/10) as 5/13 and 7/13 due to paying on deficiency for 3 yrs after short sale. FNMA: Tri-merged DO credit up to 2 on Chase and 4 on WF HELOC and receives Appr/Elig. FHLMC: Tri-merge payment history goes to 5 and receives Elig/Caution. LPA run with Credit Infiles, Receive ELIGIBLE/ACCEPT findings and NO PAYMENT PATTERN SHOWS UP FOR CHASE OR WELLS FARGO. Reps and Warranties not available. On credit Infiles, Only Experian and TransUnion files pulled and Chase and Wells Fargo Home Equity only shows up on TransUnion. Could payment history where a number greater than 4 exists be of greater importance than MOP (Method of Payment) code? #5 pgs SS 5/28/ Appr/ Elig/ Eligible Caution Not pulled FNMA: CO FHLMC: FCL/w tri-merge 9-XP, EF SHORT SALE Status: CHARGE-OFF. Fannie Mae: Regions 2 nd mtg. shows as CHARGE-OFF on DO Approve/Eligible. BB&T 1 st mtg. lender does not even show up on tri-merged credit! Freddie Mac: Tri-merge credit submiss. Shows FCL. #6 pgs SS 5/15/ Appr/ Inelig. Then, Not pulled Elig/ Accept FNMA: CIC: PFCL FNMA: Acranet: CO 9-XP, TU SHORT SALE! Important to note: Nov. 2015: when run using FNMA workaround directions, loan was approved. However, 2

4 Appr/ Eligible with 2 nd pull FHLMC: FCL/w credit infiles consumer was only 3 yrs past short sale. At the same time that workaround was tried, consumer received Elig/Caution in FHLMC due to foreclosure. Further investigation into FHLMC was not done due to borrower not 4 yrs past short sale. Sept. 2016: FNMA: A: CIC Tri-Merged Credit resulted in FNMA DO Approve/Ineligible with Suntrust showing as preforeclosure and payment history went to 9. B: Acranet Credit Tri-Merged resulted in FNMA DO Approve/Eligible with Suntrust showing as CHARGE-OFF and payment history went to 6. FHLMC: When tri-merge with Acranet used on 11/7/15, Eligible/Caution received with lates in payment history from 1 to 6. Then, consumer rec d Elig/Accept on 9/23/16 when credit infiles only were pulled from LPA. FHLMC support stated that this was because Equifax was not pulled on LPA Credit In-File. This was even when Experian showed 1 through 6 on payment history and Transunion showed 5 s on payment history. #7 pgs DIL 2/11/ Appr/ Elig/ Eligible Accept Elig/ Accept FNMA: DIL 8-XP DEED-IN-LIEU CIC Tri-merge: TransUnion has FORECLOSURE in status and DEED IN LIEU in remarks. Experian has Vol Surrender in status, 8 in history line and Deed in Lieu in remarks. FNMA: Risk Eligibility/4. Clearly defines Deed-in-Lieu on front page of Approve/Eligible findings. FHLMC: Eligible/Accept on LPA. Deed in Lieu on merged credit and credit infiles. M5 on merged credit though history goes up to 8. On credit infiles, Experian history goes up to 6 and TransUnion goes up to 5.! A unique note special handling-contact subscriber if more info required and contact member for status is noted on the FHLMC merged and credit infiles.! This client is a major loan servicer employee. #8 pgs NON E! 6/6/ Refer w/ Elig/ Caution Caution Then, used work around: Appr/ Eligible Elig/ Caution FNMA: FCL FHLMC: FCL 8-XP NO SHORT SALE, DIL OR MODIFICATION BUT HAD EXCESSIVE LATE MTG. PAYMENTS PRIOR TO SALE OF HOME! Consumer closed on home in her name and with profit.! Bank United and Bank of America both experienced delinquencies over 120 days late prompting FORECLOSURE proceedings prior to sale of home.! The consumer was being turned down for a car loan at present due to foreclosure code.! The borrower closed on 6/6/16 and mortgage lates were within the last 12 months, making the loan ineligible for approval. However, this was not noted on case #8 as it was on case #9, a modification, as a primary reason for denial. The top reason for denial was the Foreclosure on the account. FNMA: Initial run result was Refer w/caution but changed to Approve/Eligible with FNMA workaround. FHLMC: Elig/Caution with both merged and credit infile noting Foreclos proceed. No workaround. Payment history is coding as a FCL. #9 pgs MO D 5/ Refer w/ Elig/ Caution Caution Elig/ Caution FNMA: FCL FHLMC: FCL 8-XP MODIFICATION FNMA: DO identified that the mortgage was 60 days or more past due within the 12 months prior to the credit report. The 2 nd reason was the identification of a foreclosure within the last 7 years. 3

5 #10 Pgs Co- Borr on MO D 7/1/14 not FHA: avail Refer/ Eligible CONV: Refer with Caution Then, work around: Appr/ Eligible FHA: Refer Not pulled Workaround steps 1-5 noted on Case #8 (pgs 42-43) worked. Refer w/caut was primarily due to late mortgage payment in last 12 months. FHLMC: Elig/Caution with both merged and credit infile. No workaround. FNMA: FCL 8-XP MODIFICATION ON CO-SIGNED LOAN WITH RELATIVE FNMA: FHA received Refer denial on modification. Commonly, Total Scorecard on FHA does not deny but notes there may be FCL. Modification resulted in denial even though Total Scorecard was used. Conventional also received Refer denial but was able to be changed with FNMA workaround. FHLMC: FHA only run with tri-merged credit, received Refer denial. Fannie Mae: App/Eligible: Approve Appr/Ineligible is approvable loan if ineligible trait fixed Refer w/caution: Decline. Requires manual underwrite. Freddie Mac: Eligible/Accept: Approve Eligible/Caution: Decline. Requires manual underwrite. From author: Dissecting Detail of Data for Ten Cases all ten cases are set up in the same format. In Comments column on above Case Data Summary, Fannie Mae (FNMA) or Freddie Mac (FHLMC) differences are noted. This report concentrates on how the foreclosure code affects a new conventional mortgage with both Fannie Mae and Freddie Mac automated systems. Some of these and additional cases have been run through both Fannie Mae and Freddie Mac automated systems for an FHA or VA loan and receive an approval that notes that Total Scorecard was run additionally within the automated system. Though a loan approval results, the findings clearly state that there may be a previous pre-foreclosure or foreclosure and it leave the responsibility of getting this confirmed up to the lender. However, Case #10, where the past mortgage was a government modification, both the Fannie Mae and Freddie Mac automated systems resulted in a Caution denial. A tri-merged credit report from CIC Credit was pulled for the first 9 cases. CBC Innovis was used for Case #10. Reference number and a date is shown on each case when available. A visual of the short sale, deed in lieu or modification credit trade line from the lender hard pull is shown when available. A snapshot of the individual bureau, or repositories of Experian, TransUnion and Equifax for that trade line is shown directly below it when available. Most often, all 3 bureaus show up for each tradeline. Occasionally, only two show up. However, the 3 rd bureau can be obtained from the credit reporting agency. The foreclosure credit code that is applied to credit of consumers with a past short sale, modification or excessive late payments on a past mortgage prolongs the ability to obtain a new conventional mortgage after four years to seven years, the wait timeframe required after a foreclosure. Fannie Mae All cases were run through the Fannie Mae Desktop Originator (DO) automated underwriting system (AUS) with tri-merged credit reports. Findings for an approval or declination and a visual of what we see is included. Also, a visual of what the blended trimerged credit in Fannie Mae looks like is provided when available. Fannie Mae has a workaround that is being successfully utilized for short sales, deeds in lieu and for modifications. It appears that once this workaround is done, future Fannie Mae Desktop Originator/Underwriter submissions, sometimes years later, reflect the changed information. There is no workaround for Freddie Mac. When a conventional loan receives a Caution denial due to a foreclosure, the lender name, account number and Date Reported show up in the Desktop Originator/Underwriter findings for the affected account. When the loan is approved with the Fannie Mae workaround, the date reported disappears from the account information on the findings. 4

6 Freddie Mac For Freddie Mac, cases #1-9 were run first through the Loan Product Advisor (LPA) with the lender tri-merged report from CIC credit. Then, the case was run again using the credit in-file option provided internally through the Freddie Mac LPA automated underwriting system (AUS) when possible. A snapshot of what Freddie Mac s tri-merged credit and separately, the credit in-files, is included when available. Case #10 was from an outside lender. A tri-merged credit from CBC Innovis credit reporting agency (CRA) was used. This CRA does not provide the ability to see all 3 credit bureaus (Experian, Equifax, TransUnion) separately. However, customer support provided what each bureau showed verbally and this is stated on case #10. Every credit in-file pulled through Freddie Mac s LPA only shows Experian and Trans Union. On all files, Equifax request error shows where the Equifax credit was supposed to show up but did not appear to be run. This was discussed with Freddie Mac support who stated that if there is enough credit information on two bureaus, the 3 rd bureau does not pull. However, on case #6, upon receiving an Eligible/Accept when credit in-files were used on 3/10/17 compared to the Eligible/Caution when the tri-merge from Acranet was used on 11/7/15, a reason given was that the 3 rd bureau, Equifax, was not pulled and could have made the difference. An example of what verbiage for the exclusion of Equifax from LPA Credit In-Files looks like on all reports is shown below. There is no variation for foreclosure verbiage in Freddie Mac. In all cases the below verbiage appears under Credit & Liabilities within Messages on the Loan Product Advisor. 13. Recent foreclosure/signif derog appears on credit report appears in findings or it does not. Other remarks that are often included: 64. Crdt rpt w/recent mtg delinq or review mtg credit history YW. The Borrower has had a foreclosure within the last seven years. The mortgage file must also contain evidence of the completion of the foreclosure. On case #1, the past short sale account, the only mortgage account with any derogatory information, was not even found on the credit in files pulled through Freddie Mac s LPA. When Freddie Mac was called to question where the account that was producing the foreclosure verbiage was at, it was stated that this was in the RAW DATA on Freddie Mac s end, unable to be seen by a lender. Further it was noted that the foreclosure verbiage was listed under Experian. It was stated that the consumer would need to go to Experian to get this corrected. 5

7 Raw Data for credit does not look like what lenders see on the tri-merge credit or in the LPA Credit In-Files. Below are examples of what Raw Data looks like. Raw Data is often referred to as where the credit code for foreclosure can be found. Raw data is not viewable by consumers or lenders, though both Fannie Mae and Freddie Mac customer support may be able to view raw data to determine which credit bureau the foreclosure code was applied by. Raw Data from Equifax Raw Data from Experian 6

8 Number of consumers at risk, HOW Problem continues 1. 1,978,754 short sales and deed in lieu were completed from 1/1/2010 through 12/31/2016. The wait timeframe after a short sale or deed-in-lieu is 4 years, rather than the 7 year wait timeframe after a foreclosure. 2. As of Dec. 31, 2016, 1,032,211 of those with a past short sale or deed-in-lieu are past the 4 year wait timeframe and are now eligible to re-enter the housing market. Any of these clients and additionally those who had a modification and many more who had excessive mortgage lates, will most likely encounter a new mortgage denial for a Fannie me or Freddie Mac conventional mortgage. 3. The foreclosure credit code that is applied to credit for a past short sale/pre-foreclosure, charge-off, modification or excessive late payments on a past mortgage prolongs those eligible to get a new conventional mortgage after four years to a seven year wait required after a foreclosure. 4. Please look at the payment pattern for case #4 (pgs 21-24). FNMA: Tri-merged DO credit up to 2 on Chase and 4 on WF HELOC and receives Appr/Elig. FHLMC: Tri-merge payment history goes to 5 and receives Elig/Caution. On LPA run with Credit Infiles, receives ELIGIBLE/ACCEPT findings and NO PAYMENT PATTERN SHOWS UP FOR CHASE OR WELLS FARGO. Could payment pattern where a number greater than 4 exists be higher in importance than MOP (Method of Payment) code? 5. It has been suggested that the foreclosure code on short sale credit may be incorrectly applied in the Fannie Mae and Freddie Mac automated systems. However, look at case #8. This was a consumer who did not have a short sale or a modification but did have excessive mortgage lates before finally selling her property with a small profit. However, this consumer learned of the foreclosure code applied to her excessive mortgage lates through Achieva Credit Union when she was turned down for a car loan after the property was sold. It would not be common practice for a lending institution to run a consumer car loan application through either the Fannie Mae or Freddie Mac automated underwriting systems used for mortgage approval purposes. 6. I am used to seeing this problem and the triggers because I seek this information from consumers, lenders and credit reporting agencies who encounter the foreclosure code on past short sale credit. Often, respectfully, underwriters, loan originators and even Fannie Mae and Freddie Mac customer support representatives must be directed to where it is believed the problem exists upon getting a denial through automated systems for either Fannie Mae or Freddie Mac conventional submissions. Seeing the conflict and understanding why it is a problem for the affected consumers is time-consuming for lenders, consumers, credit reporting agencies and for the Fannie Mae and Freddie Mac support that helps with trying to get to the bottom of this problem. I have been told on multiple occasions, specifically by Freddie Mac support, that they are 7

9 getting an increase in calls from lenders questioning the LPA findings and the message under Credit and Liabilities that states foreclosure for a short sale mortgage account. 7. No lenders in the United States can be found that will allow for a manual underwriting of a conventional Fannie Mae or Freddie Mac conventional loan, though both Fannie Mae and Freddie Mac provide underwriting guidance and acceptance of a manual underwrite, outlined in their respective Seller/Servicing guides. Reasons given by lenders for why a manual underwrite is not done is that Reps and Warranties are not provided on manually underwritten conventional mortgages. Lenders also stated that the yield premium provided for manually underwritten loans is not high enough to cover the risk of a buyback of the loan. If: a. Manual underwriting for conventional Fannie Mae and Freddie Mac mortgages are not available b. Findings from Fannie Mae and Freddie Mac automated systems continue to show a conventional mortgage denial due to an incorrect pre-foreclosure or foreclosure status for past short sales, modifications, or for a mortgage where none of the latter exists but mortgage lates were excessive c. The consumer has applied to a lender where Freddie Mac is the primary conventional product and there is no workaround, as there is in Fannie Mae then millions who have a past short sale, a modification or excessive mortgage lates will likely experience a conventional mortgage turndown when they are eligible to get a new conventional mortgage. 8. A second problem of the dispute, often applied when the foreclosure problem is attempted to be fixed. A dispute hides the actual credit from Fannie Mae and Freddie Mac automated systems and must be removed from the credit when the consumer applies for a new mortgage. When the dispute is lifted, problematic credit comes back and most often credit scores plummet. This results in a higher rate for the consumer and the lender must pay for a Rapid Rescore, the quickest way for consumers to get a credit score change. This is highly problematic when found during a contract with a deadline. Lenders that end up paying for the Rapid Rescore often do not want to assist consumers where this problem is anticipated due to the cost they must incur. 9. A third problem of Date Reported is also shown in cases. Date Reported is the most recent request for change to an account and is the factor that automated systems read to see if an occurrence such as a short sale is within its required wait timeframe. It is also often the date of the dispute. This date cannot be changed per credit reporting agencies. 10. Both the Dispute and Date Reported problems are often the unintended consequence of an attempt by the consumer to correct the erroneous foreclosure code that shows up on their past short sale. 11. It is harder to get a consumer with a past short sale or modification approved for a new conventional mortgage than for consumers after a Bankruptcy or Foreclosure. There is no discrepancy when it comes to a a. Foreclosure b. DIL c. Bankruptcy There is discrepancy when it comes to a a. short sale/pre-foreclosure b. charge-off c. modification This confusion is often blamed on 1 or more of these parties: a. FNMA b. FHLMC c. Credit Reporting Agencies d. Short Sale lenders 12. This same problem has already started to repeat itself with negative equity non-fannie Mae/non-Freddie Mac 1st mortgages and modifications where no refinance exists and lenders insist on mortgage delinquency first before any assistance can be provided. Pamela M. Marron 8

10 #1 Short Sale Short sale closed date: 4/1/2010 Wells Fargo was short sale 1 st mtg. lender No deficiency loan required. Fannie Mae workaround done on initial loan approval for 10/2013 new mortgage. Was not required for Approve/Eligible on newer submissions after this date. Experian only repository that showed up for Wells Fargo tradeline on CIC Tri-merged credit. Credit Report Agency/Report Type: CIC/ Tri-Merged Credit Ref#: Date: 9/14/16 Credit Scores: EF: 653 XP: 617 TU: 799 Case tradeline on Tri-Merged credit blended (TU/EF/XP) report. Highlighted source(s) are which repositories broken down next. On tradeline, dissecting 3 repositories: (TransUnion, Experian, Equifax) Only repository that showed up was Experian. 9 in payment history after a C (Current). Also, noted as Settled under status. 9

11 #1 Fannie Mae Desktop Originator (DO) automated finding using tri-merged credit report Findings: Approve/Eligible Tri-merged credit: CIC Credit Casefile ID: Date: 3/25/2017 Reasons for denial or workaround needed: Workaround done on initial loan approval in Not required for Approve/Eligible on this submission. Verbiage on findings related to FCL: Desktop Underwriter has identified the following account on the credit report as being subject to a preforeclosure sale. What tri-merge credit looks like in Fannie Mae Desktop Originator: 3 repositories (TU/XP/EF) blended credit 9 in payment history 10

12 #1 Freddie Mac automated finding using tri-merged credit Findings: Eligible/Caution Tri-merged credit: CIC Credit LP AUS Key: Date: 9/14/16 Reasons for denial: See below Verbiage on findings related to FCL: What credit looks like: Unable to retrieve a copy of the tri-merge. The credit report is out of date and the LPA system does not hold after 120days. 11

13 #1 Freddie Mac automated finding using Loan Product Advisor (LPA) Credit In-File Findings: Eligible/Caution LP AUS Key: Credit Scores: EF: REQUEST ERROR XP: 664 TU: 792 Date: 3/23/17 Reasons for denial: See below. Verbiage on findings related to FCL: What Credit Infile looks like with separated repositories in Freddie Mac LPA: NO CREDIT FOR DELINQUENT MORTGAGE SHOWED UP ON THE LPA CREDIT IN-FILE. THE FREDDIE MAC representative (Anna, AURA- 1WPX8V on 3/24/17) stated that she can see in RAW DATA that EXPERIAN notes a mortgage delinquency for this file! However, lender is not able to see this on printed LPA In-File! Anna stated this could only be changed through EXPERIAN Though the Credit In-File are available, Wells Fargo nor any derogatory mortgage credit account was on the report. Thus, there is no screen shot available. Equifax did not pull. 12

14 #2 Short Sale Short sale closed date: 7/30/2012 Flagstar Bank was short sale 1 st mtg. lender No deficiency loan required. 2 nd mtg. with Greentree Mtg. also paid off. However, does not show on tri-merge credit or LPA credit In-File. Credit Report Agency/Report Type: CIC/ Tri-Merged Credit Ref#: Date:9/15/16 Credit Scores: EXF: 696 EXP: 697 TU:680 Case tradeline on Tri-Merged credit blended (TU/EF/XP) report. Highlighted source(s) are which repositories broken down next. On tradeline, dissecting 3 repositories: (TransUnion, Experian, Equifax) 13

15 #2 Fannie Mae Desktop Originator (DO) automated finding using tri-merged credit report Findings: Approve/Eligible Tri-merged credit: CIC Credit Casefile ID: Date: 3/1/2017 Reasons for denial or workaround needed: n/a Verbiage on findings related to FCL: What tri-merge credit looks like in Fannie Mae Desktop Originator: 3 repositories (TU/XP/EF) blended credit 14

16 #2 Freddie Mac automated finding using tri-merged credit Findings: Eligible/Caution Tri-merged credit: CIC Credit LP AUS Key: Date: 9/15/16 Reasons for denial: See below Verbiage on findings related to FCL: What credit looks like: There is no copy of the tri-merged credit report from the Freddie Mac LPA system. This loan was entered and run on 9/15/16. Tri-merged credit that is over 120 days old is deleted from the LPA system. 15

17 #2 Freddie Mac automated finding using Loan Product Advisor (LPA) Credit In-File Findings: Eligible/Caution LP AUS Key: Credit Scores: EF: REQUEST ERROR no credit pulled XP:702 TU:687 Date: 3/2/17 Reasons for denial: See below. Verbiage on findings related to FCL: What Credit Infile looks like with separated repositories in Freddie Mac LPA: 16

18 #3 Short Sale with Deficiency Short sale closed date: 12/13/2011 Coastal States Mtg. was short sale property 1 st mtg. lender and was paid off in full on 12/13/ nd mtg. with 121 Federal Credit Union was not paid off at closing; thus, short sale. However, consumer paid off deficiency $12,000 on 6/28/13. Deficiency loan required and paid off for 121 Federal Credit Union. This is executive with Chase and was problem going delinquent.! Date Reported moved up to 6/13 when short sale deficiency paid off, 18 months after 12/11 short sale closing. Credit Report Agency/Report Type: CIC/ Tri-Merged Credit Ref#: Credit Scores: EF:769 XP:734 TU:727 Date:12/15/16 Case tradeline on Tri-Merged credit blended (TU/EF/XP) report. Highlighted source(s) are which repositories broken down next. On tradeline, dissecting 3 repositories: (TransUnion, Experian only avail) 17

19 #3 Fannie Mae Desktop Originator (DO) automated finding using tri-merged credit report Findings: Approve/Eligible Tri-merged credit: CIC Credit Casefile ID: Date: 12/18/16 Reasons for denial or workaround needed: Fannie Mae workaround done when initial loan closed in 2015 (FHA). Approve/Eligible without workaround again. Verbiage on findings related to FCL: What tri-merge credit looks like in Fannie Mae Desktop Originator: 3 repositories (TU/XP/EF) blended credit 18

20 #3 Freddie Mac automated finding using tri-merged credit Findings: Eligible/Caution Tri-merged credit: CIC Credit LP AUS Key: Date: 3/25/17 Reasons for denial: See below. Verbiage on findings related to FCL: What tri-merged credit looks like in Freddie Mac LPA:! Date Reported is 7/2013, updated from 12/13/2010 short sale closing date. Short sale coded as M9. 19

21 #3 Freddie Mac automated finding using Loan Product Advisor (LPA) Credit In-File Findings: Eligible/Caution LP AUS Key: Credit Scores: XP: 734 EF: ERROR REPORTED. File not reported. TU: 725 Date: 3/25/17 Reasons for denial: See below. Verbiage on findings related to FCL: What Credit Infile looks like with separated repositories in Freddie Mac LPA: 20

22 #4 Short Sale with Deficiency Short sale closed date: 8/5/2010 Chase Mtg.was short sale 1 st mtg. lender. Chase wanted $56K deficiency. Borrower paid on for 3 yrs, then paid off 5/13. 2 nd mtg. with Wells Home Equity. Deficiency loan required.! Date Reported on Chase and Wells Fargo Home Equity both show more recent than short sale (5/13 and 7/13) due to paying on deficiency for 3 yrs after short sale.! Freddie Mac: LPA run with Credit Infiles, Receive ELIGIBLE/ACCEPT! However, Reps and Warranties not available. Also on credit infiles, Only Experian and TransUnion files pulled and Chase and Wells Fargo Home Equity only show up on TransUnion. Credit Report Agency/Report Type: CIC/ Tri-Merged Credit Ref#: Credit Scores: EF:683 EXP:721 TU:692 Case tradeline on Tri-Merged credit blended (TU/EF/XP) report. Date:3/ Repositories for Chase, Wells Fargo: TransUnion and Equifax 21

23 #4 Fannie Mae Desktop Originator (DO) automated finding using tri-merged credit report Findings: Approve/Eligible Tri-merged credit: CIC Credit Casefile ID: Date: 3/26/2017 Reasons for denial or workaround needed: FNMA Workaround was done on this borrower on 2015 purchase. Verbiage on findings related to FCL: What tri-merge credit looks like in Fannie Mae Desktop Originator: 2 repositories (TU/EF) blended credit 22

24 #4 Freddie Mac automated finding using tri-merged credit Findings: Eligible/Caution Tri-merged credit: CIC Credit LP AUS Key: Date: 3/26/17 Reasons for denial: See below. Verbiage on findings related to FCL: What blended tri-merge credit looks like: Date Reported more recent than short sale closing date 23

25 #4 Freddie Mac automated finding using Loan Product Advisor (LPA) Credit In-File Findings: Eligible/ACCEPT! LP AUS Key: Credit Scores: EF: Request Error. Equifax did not pull. XP:721 TU: 692 Date:3/26/17 Reasons for denial: N/A Verbiage on findings related to FCL: NONE! TransUnion only repository that shows Chase and Wells Fargo Home Equity from short sale. What Credit Infile looks like with separated repositories in Freddie Mac LPA: TransUnion Equifax 24

26 #5 Short Sale with Deficiency Short sale closed date: 5/28/2010 BB&T was short sale 1 st mtg. lender 2 nd mtg. with Regions Bank! Fannie Mae: Regions 2 nd mtg. shows as CHARGE-OFF on DU Approve/Eligible. BB&T 1 st mtg. lender does not even show up on tri-merged credit! Credit Report Agency/Report Type: CIC/ Tri-Merged Credit Ref#: Date:9/18/16 Credit Scores: EF:661 XP629: TU:662 Case tradeline on Tri-Merged credit blended (TU/EF/XP) report. Highlighted source(s) are which repositories broken down next. On tradeline, dissecting 3 repositories: (TransUnion, Experian, Equifax) 25

27 #5 Fannie Mae Desktop Originator (DO) automated finding using tri-merged credit report Findings: Approve/Eligible Tri-merged credit: CIC Credit Casefile ID: Date:9/19/16 Reasons for denial or workaround needed: N/A Verbiage on findings related to FCL: Verbiage states CHARGE-OFF and loan was approved! What tri-merge credit looks like in Fannie Mae Desktop Originator: 3 repositories (TU/XP/EF) blended credit 26

28 #5 Freddie Mac automated finding using tri-merged credit Findings: Eligible/Caution Tri-merged credit: CIC Credit LP AUS Key: Date: 9/19/16 Reasons for denial: See below Verbiage on findings related to FCL: What credit looks like: Not available. 27

29 #5 Freddie Mac automated finding using Loan Product Advisor (LPA) Credit In-File Findings: NOT AVAILABLE. CONSUMER DID NOT WANT ADDITIONAL CREDIT PULLED. LP AUS Key: Credit Scores: EXF: EXP: TU: Date: Reasons for denial: Verbiage on findings related to FCL: What Credit Infile looks like with separated repositories in Freddie Mac LPA: 28