Credit scoring is one of the great mysteries of the universe. The only ones that know how it fully works are the ones doing the scoring. And they ain't telling!
We do know that they take into consideration:
-
Payment history
-
Debt to income
-
Available credit
Missing payments will affect payment history and the Short Sale itself will affect debt to income and how the loan is settled. Not missing payments will help but still a Short Sale is a deragatory event for your credit.
Short Sales have always affected credit scoring about the same as a foreclosure or deed in lieu. the difference is that it doesn't show up as a foreclosure. It normally gets reported as "settled for less than owed" or something similar.
The main incentive for sellers to do a Short Sale is that they can have some control over what happens to the deficiency and how it is handled. In Florida a deficiency judgment is almost automatic with a foreclosure. with a short sale we can negotiate a waiver of the lender's deficiency rights. This is a HUGE difference.
The Seller can also have some control over when they have to move instead of just being kicked out once the foreclosure goes through.
A Short Sale is being proactive and solving a problem. A foreclosure is playing the victim. Don't be a victim.
Comments(31)