Issue

  Foreclosure

  Successful Short Sale

Future Fannie Mae Loan-Primary Residence

A home who loses a home to foreclosure is ineligible for a Fannie Mae-backed morgage for a period of 5 years.

A homeowner who successfully negotiates and closes a short sale will be eligible for a Fannie Mae-back mortgage after only 2 years.

Future Fannie Mae Loan-Non-Primary

An investor who allows a property to go to foreclosure is ineligible for Fannie Mae-back investment mortgage for a period of 7years.

An investors who successfully negociates and closes a short sale will be eligible for Fannie Mae-backed investment mortgage after only 2 years.

Future Loan with any Mortgage Company 

On any future application, a prospective borrower will have to answer yes to question C in sectionVIII of the standar 1003 form that aska "Have youhad property foreclosed upon or given title or deed in lieu thereof in the last 7 years?"This will 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 will affect a credit score for over 3 years.

Only late payments on mortgage will show,and after the sale,mortgage is normally 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 12 to 18 months.  

Credit History 

Foreclosure will remain as a public record permanently,and on a person's credit history for 10 years or more. 

A short sale is not reported on credit history.There is no specific reporting item for 'short sale'.The Loan is typically reported 'Paid in full,settled'.

Security Clearance 

Foreclosure is the most challenging issue agains a security clearance aoutside a serious misdemeanor or felony conviction.If a client has a foreclousure 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. 

On its own,a short sale does not challenge most security clearances. 

Current Employment

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. 

A short sale is not reported on a credit report and is therefore not a challenge to employment. 

Future Employment

Many employers are requiring credit checks on all job applicants.A foreclosure is one of the most detrimental credit items an applicant can have and in most cases will challenge employment. 

A short sale is not reported on a credit report and is therefore not a challenge to future employment.

Deficiency Judgment 

In 100% of foreclosures  (except in those states where there is no deficiency), the bank has the right to pursue a deficiency judgment.

In some successful short sales, it is possible to convince the lender to give up the right to pursue a deficiency judgment against the homeowner.