NMP - February 2018 - 38

Drilling Down on
Negative Equity Issues

A Little-Known Benefit of HUD-Approved Housing
Counseling: Assisting Consumers With Credit Issues
BY PAM MARRON

FEBRUARY 2018 n National Mortgage Professional Magazine n

NationalMortgageProfessional.com

38

great deal of what is
involved in a
mortgage centers
around credit. Help
that can fix credit
issues long-term is
available at little or no cost within
the HUD-approved housing
counseling industry.
In June 2016, I was appointed to
the HUD Housing Counseling
Federal Advisory Committee
(HCFAC). This is a 12-person
Committee comprised of three
members each from the real estate
community, the mortgage industry,
the housing counseling agency
(HCA) industry and three consumers.
Since joining HCFAC, I have learned
a great deal about education and
services that HUD-approved HCA's
can offer consumers. Most services
are free, on a sliding scale basis or
are a fee for service.
Looking at credit and getting
consumers "mortgage ready" is a
big part of HUD-approved housing
counseling. And if in-depth credit
counseling is needed, housing
counselors can refer consumers to
agencies with credit counselors
trained specifically to help with
credit. The National Foundation for
Credit Counselors (NFCC.org) is a
main organization that certifies and
then recommends credit counselors
that empower consumers to take
charge of their finances through
one-on-one financial reviews that
address credit card debt, student
loans, housing decisions and overall
money management.
In 2017, an effort was started with
the help of the NFCC.org to assist

A

past short-sellers who continue to
have a foreclosure code applied to
past short sale credit. This problem
is often learned of mid-contract and
results in the loss of a new home
contract, changing to an FHA
mortgage, or changing to a portfolio
conventional loan with both a higher
interest rate and downpayment ...
instead of the Fannie or Mae Freddie
Mac conventional loan applied for.
There is a workaround in Fannie
Mae, but none exists for Freddie
Mac. This effort was started as a
pre-purchase measure to ensure
that past short-sellers had this
erroneous credit issue cleared up
before they attempted a new
purchase when eligible to purchase
again. The fix is available at
ForeclosureCreditFix.com.
Because of my interaction with
this effort, I learned of how much
credit help is provided with HUDapproved housing counselors and of
more in-depth help that can be
provided by certified credit
counselors. And counselors can help
those who need to establish credit
... a common need among
Millennials.
Mortgage professionals
specifically trained to originate loans
could certainly use the services of
HUD-approved housing counselors
and certified credit counselors for
clients with credit needs. Often,
consumers come to us with credit
issues that can affect their ability to
get a mortgage or the best interest
rate. Many of these consumers have
been to credit repair companies that
apply methods that temporarily hide
credit, and mortgage professionals

must often undo these measures
(such as a dispute) to get the
consumer a mortgage. What the
credit repair industry has made clear
is that there are many clients in need
of repairing their credit! Housing
counselors can assist consumers to
correct their credit and at a far lower
cost (if any).
A new effort has started to show
Realtors and loan originators how to
refer credit challenged clients to
HUD-approved housing counseling
agencies for assistance. The HUDapproved housing counselor will
make an assessment on whether
the client needs more in-depth
credit counseling and provide this
service in-house or refer to a
certified credit counseling agency.
There has been an increase in the
number of consumers preparing for
a new home mortgage and making
an easy referral process available
for mortgage professionals is
needed. The plan is to set up a
referral system where the loan
originator is inserted into the HCA
database as the referring partner
and the consumer will sign an
agency permission document to
allow the loan originator to check on
the referred clients' progress. HCA's
are required to provide three
sources available for a loan when
the client is "mortgage ready." But
loan originators who keep in touch

with the client and the HCA will know
when these clients are ready to
purchase and can keep the realtor
apprised of the clients "mortgage
readiness." If a fee for service cost is
incurred by the client at the HCA, the
loan originator could provide a credit
towards closing costs to
compensate for these costs.
This effort will start with a limited
number of HUD-approved housing
counseling agencies and certified
credit counselors. An outline of steps
on how a loan originator can be
inputted into the referral data base
for a client and a letter of permission
signed by the client for each HCA
that allows the loan originator to
check on the client status is being
tested now.
I will be at the Tampa Bay
Homeownership Fair on Saturday,
March 3 where HCA's will meet
consumers preparing for
homeownership first. After it is
determined that the client is ready to
talk with a mortgage lender, they will
be sent to us, the mortgage
professionals.
Isn't this the way it should be ...
that consumers are prepared for
homeownership first? Isn't that what
ForeclosureCreditFix.com is doing-
fixing a problem ahead of signing a
contract?
Will keep you updated on how it
goes ... stay tuned!

Pam Marron (NMLS#: 246438) is Senior Loan Originator with
Innovative Mortgage Services Inc. (NMLS#: 250769) in Tampa
Bay, Fla. She may be reached by phone at (727) 375-8986,
e-mail PMarron@InnovativeMortgage.onmicrosoft.com or visit
HousingCrisisStories.com, CloseWithPam.com or
8Problems.com.


http://www.NationalMortgageProfessional.com http://www.ForeclosureCreditFix.com http://www.ForeclosureCreditFix.com http://www.NFCC.org http://www.HousingCrisisStories.com http://www.CloseWithPam.com http://www.8Problems.com http://www.NFCC.org

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