We have a Buyer attempting to purchase a new primary residence; a SFR non-FNMA short sale.  We also represent the Seller in the transaction.

The Buyer is putting down 80% LTV and has 700+ credit scores. However, our Buyer has a short sale that closed in April 2010. FNMA 1st and BOA HELOC in junior position.  Wells Fargo on behalf of FNMA waived deficiencies on the 1st; BOA accepted $7k waived the lien and charged off the balance.  Today, being more than 2 years from the short sale and 80% LTV our Buyer qualifies for a FNMA loan.

Not quite yet....unfortunately, the Buyer decided to be one of those few left in society that did the right thing; against the advise of his wife he made a settlement arrangement with BOA in September 2010 for the charged off balance.  BOA gladly accepted the payment, settling the account and notified all of the credit repositories.  Unfortunately, that BOA September 2010 payment was reported on the HELOC account and now FNMA DU will not approve the loan because it APPEARS to the computer that the short sale occurred in September 2010 as opposed to April 2010.  

BOA should have done the right thing and either suppressed the payment or created a separate tradeline for the charge off payment.  In effect, BOA has locked this Buyer out of the market by his good intentions to settle with BOA.  Our FNMA underwriter was amazed in that we could approved his loan today if he hadn't made that settlement payment.  Amazing......no good deed goes unpunished.

We're hoping BOA will do the right thing and correct his credit so that he's not locked out of the market until after September 2010 and we all lose on this opportunity. Otherwise, there will be a great disincentive for people involved in short sales with Bank of America to settle with them after the short sale in the event of any deficiency.