Short Sale vs. Foreclosure

Almost every option is better than foreclosure. Contact us today for a free consultation!

 Short SaleForeclosure
Deficiency Judgment Forgiven debt SB 931 - SB 458
(Tax Relief Act of 2007-H.R. 3648): You may not be held for the deficiency.
You may be held accountable for the remaining debt.
Future Home Purchase
Fannie Mae Loan
Primary Residence
You will be eligible to purchase and get a Fannie Mae-backed mortgage after only 24 months. You are ineligible to get a Fannie Mae-backed mortgage for up to 5 years.
Future Home Purchase
Fannie Mae Loan
Investment Property
You will be eligible to purchase and get a Fannie Mae-backed mortgage after only 24 months. You will be ineligible to get a Fannie Mae-backed mortgage for up to 7 years.
Future Loans with any Mortgage Company In any future mortgage application, you will have to answer “NO” to the question “Have you had property foreclosed upon or given title or deed in lieu thereof of in the last 7 years?” There is no similar declaration or question regarding a short sale. Any future mortgage application, you will have to answer “YES” to the question “Have you had property foreclosed upon or given title or deed in lieu thereof of in the last 7 years?” This will affect future mortgage rates.
Credit Score Only late payments will show on your credit report. After a short sale, mortgage is normally reported as “paid as agreed”, “paid as negotiated”, or “settled”. This can lower the score as little as 50 points if all other payments are being made. A short sale’s effect can be as brief as 12 to 18 months. Your score may be lowered anywhere from 250 to 300 points. Typically will affect your credit score for over 3 years.
Credit History A short sale is not reported on a credit history. There is no specific reporting item for “Short Sale.” The loan is typically reported as “pain in full, settled.” A foreclosure will remain as a public record permanently and on your credit history for 10 years or more. 
Security Clearance On its own, a short sale does not challenge most security clearances. Foreclosure is the most challenging issue against a security clearance outside of a serious misdemeanor or felony conviction. If a client has a foreclosure and is a police officer, in the military, in the CIA, or in any other position that requires a security clearance, in almost all cases clearance will be revoked and the position will be terminated.
Current Employment A short sale is not reported on a credit report and therefore is not a challenge to current employment. Most employers have the right and are actively checking the credit reports of all employees who are in sensitive positions. In many cases, a foreclosure is reason for immediate reassignment or termination.
Future Employment A short sale is not reported on a credit report and is therefore not a challenge to future employment. Many employers are requiring credit checks on all job applicants. A foreclosure is one of the most detrimental credit items an applicant can have and in most cases will challenge future employment.
Moving Expenses You may be eligible to receive up to $3,000 for a successful closed short sale for moving expenses under the HAFA program. You will receive nothing from your lender if your property is foreclosed upon.

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