Foreclosure VS. Short Sale
Homeowner Consequences
Foreclosure
- A homeowner who oses a home to forclosure is ineligible for a Fannie-Mae backed mortgage for a period of 5 years.
- An investor who allows a property to go to forclosue is ineligible for a Fannie-Mae backed investment mortgage for a period of 7 years.
- On any future application, a prospective borrower will have to answer YES in question C in Section VIII of the standard 1003 form that asks "Have you had property foreclosed upon or given title or deed in lieu thereof in the last 7 years?" This will affect future rates.
- Score may be lowered anywhere from 250 to more than 300 points. Typically will affect a credit score for over 3 years.
- Foreclosure will remain as a public record permanently, and on a person's credit history for 10 years or more.
- Foreclosure is the most challenging issue against a security clearance outside a serious misdameanor or felony conviction. If a client has a foreclosure and is a police officer, in the military, in the CIA, security, or any other position that requires a security clearance, in almost all cases clearance will be revoked and position will be terminated.
-Employers have the right and are actively checking the credit of all employees who are in sensitive positions. In many cases, a foreclosure is reason for immediate reassignment or termination.
- Many employers are requiring credit checks on all job applicants. A foreclosure is one of the most detrimental credit items an applicant can have an in mose cases will challenge employment.
- In 100% of foreclosures (except in those states where there is no deficiency), the bank has the right to pursue a deficiency judegement.
- In a foreclosure, the home will have to go through an REO process if it does not sell at auction. In most cases this will result in a lower sales price and longer time to sell in a declining market. This will result in a higher possible deficiency judgement.
- An investor who allows a property to go to forclosue is ineligible for a Fannie-Mae backed investment mortgage for a period of 7 years.
- On any future application, a prospective borrower will have to answer YES in question C in Section VIII of the standard 1003 form that asks "Have you had property foreclosed upon or given title or deed in lieu thereof in the last 7 years?" This will affect future rates.
- Score may be lowered anywhere from 250 to more than 300 points. Typically will affect a credit score for over 3 years.
- Foreclosure will remain as a public record permanently, and on a person's credit history for 10 years or more.
- Foreclosure is the most challenging issue against a security clearance outside a serious misdameanor or felony conviction. If a client has a foreclosure and is a police officer, in the military, in the CIA, security, or any other position that requires a security clearance, in almost all cases clearance will be revoked and position will be terminated.
-Employers have the right and are actively checking the credit of all employees who are in sensitive positions. In many cases, a foreclosure is reason for immediate reassignment or termination.
- Many employers are requiring credit checks on all job applicants. A foreclosure is one of the most detrimental credit items an applicant can have an in mose cases will challenge employment.
- In 100% of foreclosures (except in those states where there is no deficiency), the bank has the right to pursue a deficiency judegement.
- In a foreclosure, the home will have to go through an REO process if it does not sell at auction. In most cases this will result in a lower sales price and longer time to sell in a declining market. This will result in a higher possible deficiency judgement.
Successful Short Sale
- A homeowner who successfully negotiates and closes a short sale will be eligible for a Fannie Mae-backed mortgage after only 2 years.
- An investor who successfully negotiates and closes a short sale will be eligible for a Fannie Mae-backed investment mortgage after only 2 years.
- Only late payments on mortgage will show on your credit score, and after after the sale, mortgage is usually reported as 'paid as agreed', 'paid as negotiated', or 'settled'. This can lower the score as little as 50 points if all other payments are being made. A short sale's effect can be as brief as 12 to 18 months.
- A short sale is not reported on credit history. there is no specific reporting item for 'short sale'.
-On it's own, a short sale does not challenge most security clearances.
- A short sale is not reported on a credit report and is therefore not a challenge to employment.
- A short sale is not reported on a credit report and therefore not a challenge to future employment.
- In some successful short sales, it is possible to convince a lender to give up the right to pursue a deficiency judgement against the homeowner.
- In a properly managed short sale, the home is sold at a price that should be close to market value, and in almost all cases will be better than an REO sale resulting in a lower deficiency.
- An investor who successfully negotiates and closes a short sale will be eligible for a Fannie Mae-backed investment mortgage after only 2 years.
- Only late payments on mortgage will show on your credit score, and after after the sale, mortgage is usually reported as 'paid as agreed', 'paid as negotiated', or 'settled'. This can lower the score as little as 50 points if all other payments are being made. A short sale's effect can be as brief as 12 to 18 months.
- A short sale is not reported on credit history. there is no specific reporting item for 'short sale'.
-On it's own, a short sale does not challenge most security clearances.
- A short sale is not reported on a credit report and is therefore not a challenge to employment.
- A short sale is not reported on a credit report and therefore not a challenge to future employment.
- In some successful short sales, it is possible to convince a lender to give up the right to pursue a deficiency judgement against the homeowner.
- In a properly managed short sale, the home is sold at a price that should be close to market value, and in almost all cases will be better than an REO sale resulting in a lower deficiency.
