This is one of the most frequently asked questions by homeowners in regards to short sales.
A majority of homeowners contemplating short sales get behind in their payments and 
the moment you go 30+ days behind on your payments, your bank has the right to report to all of the credit bureau's that you are 30 days behind on your payments. After going through a short sale or a foreclosure, most people will have multiple 30, 60 and 90+ day late payments reported on their credit report.
When the short sale is completed, most banks will report to your credit report that your account has been "paid in full for less than the full amount". Your credit report may also be marked as "settled". It is important to keep in mind that each lender has a different way of reporting that a Short Sale was done, but this is the most common language that is seen. If your home were to go to foreclosure you woould most often see the bank report "Foreclosure" on your credit report.
It is difficult to guage how much of a credit scoring affect a short sale has vs. a foreclosure. By avoiding foreclosure, you will likely be able to resume normal borrowing (car loans, credit cards, consumer goods and such) relatively quickly. This can be accomplished by working with a Credit Scoring Expert for specific ways in which to improve your credit after the short sale is complete.
This is the second in our series on Short Sales...make sure to check out Who is Eligible for a Short Sale?
If you are behind in your mortgage payments or are having financial difficulty and think you might want to discuss the option of a short sale, please call us at (916) 405-5766 or send email to Lori@ModeandDurhaM.com. We are here to help!
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Lori Mode & Bruce Durham, Keller Williams Realty, Elk Grove
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