Home : Blogs : Mark Horan P.A. "The Resident Chef" : The Resident Chef's Blog

Short Sales and Your Credit Report.

Currently, a short sale impacts your credit by decreasing it about 140 pts I'm told. A foreclosure up to 400 points. But what has change is how a short sale is being view on your credit report. Lenders are treating a short sale as they threat a foreclosure in your ability to obtain and retain your credit. I have seen them close credit cards and reduce credit limits as well as inflating interest rates.

So why should a homeowner continue to do short sales and not just let their homes go into foreclosure? If the home is your primary residence, and you short sale it, you have no further obligation to the creditor. If you are foreclosed on, the creditor can come back at you for the deficient amount after the creditor disposes the property up to 2 years.

I feel that in the future, with the amount of short sales, foreclosures, and bad credit card dept, in order for lenders to stay in business, the system will undergo an overhaul. But only time will tell.

Posted by Mark Horan P.A. "The Resident Chef" on 10/08/2009 11:19 PM

Comments (11)

Short Sales in the ActiveRain Channel

short sales, the resident team, foreclosures

This post has been included in Florida Information
Post is included in group: Sharing Information of Short Sales
Post is included in group: Short Sale REALTORS®
Post is included in group: Posts to Localism
Post is included in group: Almost Anything Goes
Post is included in group: All Things Florida

11 Comments on Short Sales and Your Credit Report.

OCT

Hey, Mark,

I was under the impression that, depending on the state that you were in, that short sale folks might still be liable for a deficiency judgment. Admiittedly, there may have been a recent ruling on this?

Appreciate the post.

Nancy,

I believe that House Bill HR 3648 is still in effect. That bill forgives dept of a primary residence. In all states.

Thanks for those numbers... where did you find them? I always wanted to have a more solid idea of how a short sale versus a foreclosure affected a credit. I thought it was the late and missed payments that made the biggest impact so the longer the short takes the worse the credit hits. I've got one nightmare of a short sale that has been going on for about a year and a half and with two loans both reporting the missed payments each month my clients credit is tanking!

Angie,

I did not address the missed payments. That is something altogether different. That has it's own impact relative to each individual credit report. Everyones amount , time, and history are different.

Hi Mark,

I have heard that lenders can require the sellers sign a note for the shortage as a condition of approving a sale regardless of whether they live in the home or not. Have you experienced that?

Richard,

Yes, they have been doing that for years. Last year the second mortgages really put that into play. But, the seller can refuse. In most cases a negotiation can be made.

OCT

The lenders if it was a purchase money loan cannot proceed to deficiency. If it was a refi. then they can. Here in Calif. that is the way it works.

OCT

Mark - This credit "problem" will change as time goes by , just like everything else. By 2012 credit guidelines will not even resemble the conditions that we currently have in place.

Laura, I totally agree. The ability of the lenders to lend and stay in business will bring about change.

OCT

Mark - I think the system will have to change in the next several years. Otherwise, it will just keep extending the recessionary economy as collection agencies pursue deficiencies.

Wendy-

I totally agree. Lenders are in the business of lending money. If they don't loosen up the criteria they won't be able to survive.

Leave a response…

Name:

Email:
(optional)

Comment:

What does the graphic say?