Foreclosures, Short Sales & Credit Scores

"How will a Short Sale affect my credit?" 

I am often asked this question by sellers pondering foreclosure or deed-in-lieu of foreclosure versus a Short Sale.  It may be easier to look at how foreclosure affects credit in ways that a Short Sale does not.  Kenneth R. Harney, of the Washington Post, recently wrote a fascinating article. "Walking Out of a Mortgage And Into Years of Hurt", about the ramifications of foreclosure.  Some of his investigative highlights:

1. Fannie Mae, the major federally chartered mortgage loan backer, will not allow borrowers with a foreclosure to get another Fannie Mae-backed mortgage for 3-5 years, and only with a minimum credit score of 680.
2. Freddie Mac, federally chartered to support the secondary mortgage market, sees foreclosure as a major negative on credit for seven years.
3. FICO, the gold standard in credit reporting, counts foreclosures as nearly as bad as bankrupty.
4. Freddie Mac and Fannie Mae loan applications include questioning the borrower on whether they have ever had a foreclosure or deed-in-lieu of foreclosure.  If so, the loan is more critically analyzed, and may not be so easy to obtain.

In summary, Short Sales, where the lender may report the loan as "settled" or "paid" seems a more palatable solution for future credit-worthiness.

It's Wendy!

Wendy Rulnick, Broker, CRP, CRS, GRI, ABR

Specializing in SHORT SALES and FORECLOSURES on the Emerald Coast of Florida: Destin, Fort Walton Beach, Santa Rosa Beach, Crestview, Niceville, Navarre, Mary Esther, Shalimar, Bluewater Bay, Sandestin, Seaside, Rosemary Beach, Miramar Beach, Dune Allen, Blue Mountain Beach, Alys Beach, Eglin Air Force Base, Hurlburt Field and vicinity.

1-877-487-9639 ext 204

www.ShortSaleForeclosureHelp.com

www.RulnickRealty.com