What Is A Short Sale?
A Short Sale occurs when the bank or lender holding the note on a mortgage agrees to sell the home for less than what is actually owed on it. Sounds simple but, it's not.
If you are currently behind on your house payments or underwater on your mortgage, you should consider talking with a short sale specialist about selling your home as a short sale. As a Certified Distressed Property Expert, (CDPE), I can help you navigate the slippery slope to avoid foreclosure.
It is critical that the homeowner seeking short sale approval work closely with a real estate agent proficient in the short sale process, preferably one that is certified in short sales. There are several steps the homeowner must take in order to be allowed to sell the home through the short sale process. A Realtor® that has short sale experience can help navigate the homeowner through this process, and hopefully reach a successfully negotiated short sale.
Short Sale vs. Foreclosure, Provided by Distressed Property Institute LLC :
Future Fannie Mae Loan - Primary Residence A homeowner who successfully negotiates and closes a short sale will be eligible for a Fannie Mae backed loan after 2 years. On the other hand, a homeowner who loses a home to foreclosure will be ineligible for a Fannie Mae backed loan for 5 years.
Future Fannie Mae Loan - Non Primary An Investor who successfully negotiates and closes a short sale will be eligible for a Fannie Mae backed investment mortgage after 2 years. If the investor is foreclosed on, the investor will be ineligible for a Fannie Mae backed investment mortgage for 7 years.
Future Loan with any Mortgage Company As of present, there are no declarations or questions regarding a short sale that a homeowner must state. With a foreclosure, on any future 1003 application, the perspective borrower will have to answer yes to the question, "Have you had property foreclosed upon or given title or deed in lieu thereof in the last 7 years?" This will affect future rates.
Credit Score With a successful short sale, only the 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 current. The short sale will affect credit scores 12-18 months. A foreclosure may lower a score anywhere from 250 to over 300 points. Scores are typically affected for over 3 years.
Credit History A short sale is not reported on a credit history. There is no specific reporting item for "Short Sale". The loan is typically reported as "paid in full, settled". A foreclosure will remain as a public record on a person's credit history for 10 years or more.
Security Clearances A short sale on its own does not challenge most security clearances. A foreclosure is the most challenging issue against a security clearanceoutside of a conviction of a serious misdemeanor or felony. 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.
Current Employment A short sale is not reported on a credit report and is therefore not a challenge to 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 ground for immediate reassignment or termination.
Future Employment A short sale is not reported on a credit report and is therefore not a challenge to 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 with challenge employment.
Deficiency Judgment In some successful short sales it is possible to convince the lender give up the right to pursue a deficiency judgment against the homeowner. In 100% of foreclosures (except in those states where there is no deficiency) the bank has the right to pursue a deficiency judgment.
Deficiency Judgment Amount 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 result in a lower deficiency. 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 judgment.
For more information regarding the short sale process or to schedule an interview to see if you qualify for a short sale, please feel free to contact me at: janetsoldit@gmail.com All information will remain strictly confidential.
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