Myth #1 : I need to stop paying my Mortgage to do a Short Sale

Real Estate Agent with Kona Home Team (luva llc) RS 62947

Absolutely NOT. If you have the means to continue paying, you can still pay. But a better question is, what will the Short Sale do to my credit vs a 90 day late payment. Take a look at some recently released numbers concerning your FICO Scores.

Lets take the median score of 720 

30 days late - drops that to 630-650 

90 days late - drops that to 610-630 

Short Sale/Deed in Lieu - no deficiency - 605-625

Short Sale with deficiency - 570 - 590 

Foreclosure - 570 - 590 

Bankruptcy - 525 - 545 

So does it make sense to keep making your payment -

Morally : That's an issue you have to decide on your own. 

Financially: On the surface, it doesn't appear to, But I am appalled at the lack of education to homeowners, in the event they just read the current articles out there regarding FICO and short sales.

People - when it comes down your own personal health and welfare - do the research. 

What they fail to tell you, is almost as criminal as the way they got you here in the first place. 

2010 Fannie Mae Guidelines: Waiting Period After a Pre-foreclosure Sale, Short Sale, or Deed-in-Lieu of Foreclosure 

Depending on extenuating curcimstances, your wait may be as little as 2 years before you qualify for a new home - FORGET the FICO scores, you need to qualify first!

1. Is it your Primary home?

2. Did you keep up on payments? (key, very important issue here - not even mentioned in the reports

3. Did you short sale it,  for financial gain or was there a hardship (meaning are just walking away because everybody else is, or did you lose your job, reduction in pay, divorce, )

Here it is in moe legal terms straght from Fannie Mae website

Extenuating Circumstances

Extenuating circumstances are nonrecurring events that are beyond the borrower’s control that

result in a sudden, significant, and prolonged reduction in income or a catastrophic increase in

financial obligations.

If a borrower claims that derogatory information is the result of extenuating circumstances, the

lender must substantiate the borrower’s claim. Examples of documentation that can be used to

support extenuating circumstances include documents that confirm the event (such as a copy

of a divorce decree, medical reports or bills, notice of job layoff, job severance papers, etc.)

and documents that illustrate factors that contributed to the borrower’s inability to resolve the

problems that resulted from the event (such as a copy of insurance papers or claim settlements,

property listing agreements, lease agreements, tax returns (covering the periods prior to, during,

and after a loss of employment), etc.).

The lender must obtain a letter from the borrower explaining the relevance of the documentation.

The letter must support the claims of extenuating circumstances, confirm the nature of the

event that led to the bankruptcy or foreclosure-related action, and illustrate the borrower had no

reasonable options other than to default on their financial obligations.

Guys - these are critical facts that are being ommitted in the reports that will effect the rest of your life. 


I apologize, time has run out, I will be doing a follow up with more later .

Aloha and Mahalo





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Aloha, and have a great day 

Lance Owens (RS)

(808) 936-8383

LUVA Real Estate 

75-240 Nani Kailua Dr #8 , Kailua Kona, HI. 96740 (Pines Plaza


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