From MarketWatch via Yahoo Finance:
Here’s some good news for the thousands of consumers who were shut out of a mortgage because Fannie Mae’s coding system couldn’t differentiate between a foreclosure and a short sale: Fannie Mae says it will fix the problem by mid-November. Read more
Underwriters and credit bureaus blamed the federal mortgage-backing behemoth’s standardized computer software because it didn’t have a unique code for short sales, leaving many of them to be treated as foreclosures.
The distinction is a big one. Under Fannie Mae’s “derogatory event” category, the difference could cost a borrower three to five years of waiting time before they could get another mortgage.