Short Sale VS. Foreclosure

Mortgage and Lending with Not yet determined

Okay, I am doing this from a loan officer's point of view and of what I have seen how it is reported to credit reports.

When someone has a short sale (sells it for less than the balance owed, that the lender accepted) it reports to the credit report as a 120 day late AUTOMATICALLY and it will say account settled for less than balance owed.

When a foreclosure is reported, it says either foreclosure, 120 days late, 150 days late or ALL of the above.

There is no difference in "saving someone's credit" when it comes to either doing a foreclosure or a short sale. Either way it's the same thing.

When a home is included in a Chapter 7 bankruptcy, it shows up as a derogatory remark (120 days automatically) and it says account included in bankruptcy.

SO, it does not matter how it is done, the lender STILL does not like short sales, foreclosures OR houses included in a Chapter 7 bankruptcy. They do like them included in a Chapter 13 (payment arrangements) and/or selling it on their own. I have seen this several times and lenders still don't like short sales, they are still viewed as a foreclosure. I am sure short sales are advantages to prevent judgments for the rest of the balance. But to me, a foreclosure is a foreclosure. If someone wants to go into foreclosure, they are better off to file Chapter 7 to PREVENT the judgment against them and for it to not come back to haunt them!


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Lisa Friedman
Alliance Realtors - Bedminster, NJ
Central New Jersey Real Estate

Very interesting.  I've been to several investment guru seminars and they all talk about saving someone's credit by 'helping the seller out' with a short sale.  I have doubted what they say as they just want to sell their products, coaching services, etc.

May 11, 2008 10:38 AM #1
Jim Quinn
Century 21 - Anaheim, CA
North Orange County Real Estate

Jennifer, with the short sales sellers may have the deficiency waived so it benefits them rather than going through foreclosure. I have heard that some banks don't report it as late but just paid off.

May 11, 2008 10:50 AM #2
Jim Fischetti
The Fischetti Group/Keller Williams - Wake Forest, NC

Thanks for sharing. Remember, the short sale is a WIN for the lender, its DONE and in today's market that is a great thing!


Jim in Wake Forest, NC

May 12, 2008 08:50 AM #3
Mike Rosen
Provident Team Real Estate - Leesburg, VA

So, both foreclosures and short sale show up as a red mark on your credit report - but do they remain on your credit for the same amount of time afterward?

May 12, 2008 09:22 AM #4
Jennifer Butz
Not yet determined - Lilburn, GA


yes and yes, that's what i mean, it's just dumb between doing a shortsale and going into foreclosure. It's crazy!

May 12, 2008 09:40 AM #5
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