What you need to know to make an informed decision
SHORT-SALE vs.FORECLOSURE
Ever wondered what difference it makes whether a home is sold as a short sale or if it is foreclosed on by the bank? Well, here are a few main points that will help answer the question for you. If you or anyone you know needs to list their home for sale, has further questions or would like to talk about the listings my team currently has on market -- Please call me at 916-580-6031. Thanks for reading my BLOG!! - Ken
Fannie Mae Guidelines Primary Residence
Short Sale:
Eligible for a Fannie Mae insured loan after 2 years, no restrictions.
Foreclosure:
Eligible with restrictions after 5 years, no restrictions after 7 years.
Fannie Mae Guidelines Non Primary Residence
Short Sale:
An investor who has done a short-sale is eligible for a Fannie Mae backed mortgage after 2 years.
Foreclosure:
An investor who has had a property foreclosed cannot get a Fannie Mae backed loan for 7 years.
Credit Score
Short Sale:
Late payments on mortgage will show after completion of the short-sale. The effect can be as short as 12 to 18 months. Depending on how the lender reports it, credit scores affected negatively 50 to 100 points.
ForeClosure:
Typically will affect credit score for at least three years. Scores will be negatively affected between 200 and 300 points.
Credit Application Questions (Form 1003)
Short Sale:
No questions regarding a short sale.
Foreclosure:
Question C, Section VIII: Have you had property foreclosured upon or given title or deed in lieu thereof in the last 7 years?
Credit History
Short Sale:
Depending on how lender reports, short-sales may not be reported on a credit history.
Foreclosure:
Remains as a public record for 10 years or more.
Security Clearance
Short Sale:
A short-sale does not usually raise red flags regarding security clearance.
Foreclosure:
Security clearances will usually be revoked, often times resulting in loss of employment.
Deficiency Judgment
Short Sale:
This is a negotiable issue between the Seller and the lending institution.
Foreclosure:
No negotiations between Homeowner and lending institution. It is up to the lender(s) whether to file a deficiency judgment.
Deficiency Judgment Amounts
Short Sale:
If there is a deficiency judgment, the amount is usually lower if the property has been sold through a short sale.
Foreclosure:
The foreclosure process usually will cost the lending institution more, hence resulting in a larger deficiency judgment if the judgment is filed.
Information obtained from sources that are deemed accurate, but have not been verified by Author. Information is subject to change. Individual effects may vary. All interested Persons should independently verify accuracy of the above information and seeking legal counsel is recommended.
