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Fannie mae clears rumors about second credit check requirement

By Faye Mergel
Published: Saturday, October 23rd, 2010

Reports have been flying around the housing sector recently that banks would have to run a second credit report on you hours before putting your property in to foreclosure began circling.

This latest rumour seems to be based on the fact that a couple who were evicted from their home were actually in perfectly good financial standing at the time that the notice was served. They then took a civil action case against the finance company, and they won.

Fannie Mae made a statement publicly which completely refutes what many were believing would be a new policy in the coming weeks. Previously, if a bank or finance company wanted to put your home in to liquidation (i.e. foreclosure) – they would simply need to let you know in writing 2 weeks before the actual date of the foreclosure.

However, Fannie Mae was very quick to point out that in fact this is actually not a common case, and there were a number of exceptional details in the case which led the family to win the trial.

The company has now said that individuals who are evicted from their home as a result of a mortgage sale will need to provide information freely to financing companies based on their financial situation. If they do not come clean, the bank itself can take further action against you as a consumer.

Keep in mind however that while running a second credit check on clients are not instituted policies, it can still happen, depending on the bank’s discretion. To ensure the increase in debt repayment, it is important for lending institutions to refresh the credit reports they acquire before granting a second loan to ensure that the client does not have additional debt obligations which can lead to their difficulty in repaying new loans.

Ultimately, no one really needs to worry. This changes nothing, and once again reiterates that it is important to get a credit report frequently so that you can check up on your financial standing. There’s no point in simply sitting back and hoping for the best! Get yourself signed up to a credit monitoring service as soon as possible, and you will be able to enjoy the hassle and worry free life of a high credit score. Of course, it is also a good idea to control your expenses and avoid purchasing on credit especially when you have an outstanding loan application.

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