Going through a financial hardship is stressful and a difficult time. I can help you make the right decision and work with your lender, and help get your home sold and help you avoid foreclosure.
How does it effect me? Foreclosure vs Short Sale:
Issue
Foreclosure
Successful Short Sale
Future Fannie Mae Loan Primary residence effect of May 21, 2008
A homeowner who loses a home to foreclosure is ineligible for a Fannie Mae backed mortgage for a period of five years.
A homeowner who successfully negotiates and closes a short set will be eligible for a Fannie Mae backed mortgage after only two to three years.
Future Fannie Mae Loan Non-Primary effective May 21, 2008
An investor who allows a property to go to foreclosure is ineligible for a Fannie Mae backed investment mortgage for a period of seven years.
An investor who successfully negotiates and closes a short set will be eligible for a Fannie Mae backed investment mortgage after only two to three years.
Future Loan with any Mortgage Company
On any future 1003 application, a perspective borrower will have to answer YES to question C in section 8 of the standard 1003 that asked, “have you had property foreclosed upon or given title or deed in lieu thereof in the last seven years?” This will also affect future rates
There is no similar declaration or question regarding a short sale.
Credit Score
Score may be lowered anywhere from 250 to more than 300 points. Typically, this will affect a score for more than three years.
Only late payments on the mortgage will show and after so mortgage will be reported as paid or negotiated. This will lower the score as little as 50 points if all the payments are being made. A short sales effect can be as brief as 12 to 18 months.
Credit History
Foreclosure will remain as a public record on a person's credit history for at least 10 years.
A short sale is not reported on credit history. There are no specific reporting items for a “short sale.” The loan is to be reported “paid in full, settled.”
Security Clearance
Foreclosure is the most challenging issue against a security clearance outside of the conviction of a serious misdemeanor or felony. If a client has a foreclosure and is a police officer, in the military, in the CIA or any other position that requires a security clearance, the clearance will be revoked and the position will be terminated.
A short sale on its own does not challenge most security clearances.
Current Employment
Employers have the right and are actively checking the credit regularly of all employees who are in sensitive positions. A foreclosure in many cases is grounds for immediate reassignment or termination.
The short sale is not reported on a credit report and is therefore not a challenge to employment.
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