TAMPA — Call her a consumer advocate or a pain in the rear, but a Hudson mortgage broker appears to have won a crusade to make mortgage lenders stop discriminating against people with past short sales.
“I guess I am determined,” said Pam Marron, a married mother of two young adults. “I’m a pain in the ass, and I have a big mouth. I see how this can be fixed, and I can’t figure out why they don’t fix it.”
Marron has become a national spokeswoman of sorts, fighting a mortgage processing glitch that is harming short sellers.
Technically, people with short sales — in which people sell their homes for less than they’re worth — in their history can qualify for new conventional loans in as little as two years. Theoretically, they are less of a drag than foreclosures, which often require a seven-year wait for a new mortgage that complies with Fannie Mae or Freddie Mac’s guidelines.
However, many short sellers report an infuriating problem: Their short sales are showing up on their credit reports as foreclosures.
In May, U.S. Sen. Bill Nelson, D-Fla., promised that federal regulators’ heads would roll if they didn’t find a fix. The problem is a bit arcane, but essentially the codes that lenders and Fannie Mae use in processing mortgages can’t distinguish between short sales and foreclosures.
On Thursday, Nelson’s office issued a news release saying that, in fact, Fannie Mae has found a cure. Fannie Mae’s new rules will allow lenders to disregard the erroneous codes when processing new mortgages, according to an update on Fannie Mae’s website.
It’s been a long, slow victory for Marron, a 28-year veteran of the mortgage business.
She got wind of the problems short sellers were having when they started coming back into the housing market after completing the two-year wait.
One of her clients is a Trinity man named George Albright, who went through a short sale in 2010 and wanted to buy again after two years. Instead, his short sale showed up in credit reports as a foreclosure.
Marron started getting numerous such calls and tried to point out the error to lenders. But they didn’t seem to understand the problem, she said. Worse, some lenders seemed to have a bias against short sellers and assumed they were just trying to get out of paying off their mortgages.
“There was all this press about strategic defaulters, and I could not find any strategic defaulters,” she said.
In April 2012, she got some national press when she shared short sellers’ dilemma with a Wall Street Journal Sunday columnist, and this spring got some ink in the Washington Post. She has traveled to Washington, D.C., twice in April and May — covering her own costs of $3,500 — to spread her story to the staff of various congressmen.
Her work isn’t done yet, because she’s still fighting a second problem that short sellers face, which often requires them to go delinquent on their mortgages before a bank will authorize a short sale.
However, for now she is savoring a small victory.
“She’s been the catalyst behind this since day one,” Albright said.