Just to add to what Mr. Raymondo said:
It's not just the I-9 MOP code and the problem it creates with the automated underwriting system that's an issue. Every underwriter in the country views a 120 day late on a mortgage as a foreclosure which has been the case for a number of years (even before the market crash this was the case) so even if the credit report doesn't show the I-9 code an underwriter will see the 120 day late & automatically "down grade" or deny the file. What this means is unless the borrower can get the 120 day late deleted, he will be forced to qualify for the new loan under the foreclosure guidelines which vary from program to program. FHA requires 3 years from the 120 day late to be eligible while VA only requires 2 years. Fannie Mae/Freddie Mac require 7 years.
Senior Mortgage Banker
Peoples Bank & Trust Co.