FORECLOSURE VS. SHORT SALE
Homeowner Consequences
Issue
Foreclosure
Successful
Short Sale
Short Sale
Future Fannie Mae Loan :
Primary Residence
(effective May 21, 2008)
(effective May 21, 2008)
A homeowner who loses a home to Foreclosure is
ineligible for a Fannie Mae backed mortgage for a
period of 5 years.
A homeowner who successfully negotiates and
closes a short sale will be eligible for a Fannie Mae
backed mortgage after only 2 years.
Future Fannie Mae Loan:
Non Primary
(effective May 21, 2008)
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 7 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.
Future Loan with any
Mortgage Company
Mortgage Company
On any future 1003 application, a prospective
borrower will have to answer YES to question C in
Section VIII of the standard 1003 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.
There is no similar declaration or question regarding
a short sale.
Credit Score
Score may be lowered anywhere from 250 to over
300 points. Typically will affect score for over 3
years.
Only late payments on mortgage will show and after
sale mortgage will be reported as paid or negotiated.
This will lower the score as little as 50 points if all
other payments are being made. A short sale's affect
can be a brief as 12 to 18 months.
Credit History
Foreclosure will remain as a public record on a
person's credit history for 10 years or more
Short sale is not reported on a credit history.
There is no specific reporting item for 'short sale'.
The loan is typically reported 'paid in full, settled'.
For more info on how a short sale vs. a foreclosure can effect Current Employment,
Future Employment, Deficiency Judgment and Security Clearances, please contact us.
Future Employment, Deficiency Judgment and Security Clearances, please contact us.