It's me again. The question "asker". I appreciate the various feedback on this matter and I have further info.
First, the "disputes" are those on the credit report, not the credit report itself. And the words "consumer dispute" or "disputed" stay on that report until you get them taken off. THIS is the issue. If you read the Fannie Mae policy (the link is in the content of Jenny's answer), it is pretty clear.
If a lender sends in a mortgage app for Fannie Mae approval and the credit report has any tradelines that have the word "dispute" in it, Fannie Mae will kick it back to the lender for 'validation'. It is here wherein lies the problem.....the lender has two choices: either resubmit the application with a new credit report (after having the tradelines removed which have the word 'dispute' in them) OR they may manually underwrite the loan. The lender isn't going to manually underwrite.
So, the applicant has to go through the process of contacting the accounts (credit card co, whatever) requesting that they contact the credit reporting agencies to remove this tradeline language from the report.
Having this corrected info appear on the credit report can take WEEKS. In the interim, your loan application is dead. You have lost your rate, for sure. And, if this is for buying a house, you could lose the house.
I know there is some buzz about this and frankly, I don't know how many people this affects. Only those who are trying to buy a house or refinance and in the past have disputed some charge with their credit co.
I just think that people in the real estate and mortgage business should be aware that this glitch exists and may well affect a client. If a realtor has a client who is getting ready to buy a house, they should be told to review their credit reports - not just for 'negative' reporting or credit score, but also for any account that they may have had a dispute with. And it does not matter if the dispute was resolved (which ours all were) or that the account has been closed (which ours were).
Forewarned is forearmed.