There is a ripple effect on doing a short sale and all of your clients must be made aware. I was discussing options with a client who is a home owner who bought their home at the height of the market. I was asked to do a market analysis on their property and it was determined that their home may have depreciated over 50%. Now ,it was stated that a formal appraisal would determine its market value and this is only an estimate. They have to sell the home due to a domestic issue. So this couple is faced with a problem which is being experienced by many all over the country which is being "Upside Down" in their house. They can't sell their property for what is owed. There is no choice of riding out the market based upon the situation so they face a "Short Sale" option or just a "walk away" to foreclosure. I strongly discourage the second option. I recommended that they seek advise from a real estate attorney for the ramifications of a short sale.
One must also advise them that there is a ripple effect from a "Short Sale" above and beyond the short sale itself. Your FICO score will be impacted number one, but also your credit card companies will start sending letters reducing your credit line to the balance owed. It's irrelevant how long you have been a customer with the card company and your excellent payment history with them. Someones job in these companies is to just look at FICO scores and since you had a short sale it was hit. They don't take into consideration or the time to review the credit report to determine the cause nor do they call you to try and determine the cause of the reduction in your score they just reduce your credit line. They send you some flowery letter stating that based upon the credit reporting companies (the big three) they have reduced your line of credit and/or increased your interest rate or both. This will happen.
There is an action you can take. But first understand many of these credit card companies, banks and so on took "Bailout Money" from our infamous Government to try to open the credit market back to the consumer. However, their actions were to freeze lending and use the "Bailout" money to improve their bottom line. "Basically, the hell with the consumer!"
Your action is simple. Take the time to write them a letter and terminate them. You see, they have forgotten who the customer is. Now if the consumer is not meeting their obligations with the credit card company then so be it and they have every right to take this action. But if they are either reducing your credit line and/or increasing your interest rate because of the short sale action, fire them. Pay them off and close the account. But make sure you let them know why you took this action. Remember you are the customer and part of their customer base. Without the customer base any business will fail!
Dale Simmons
DSE Realty
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