|
Future
Fannie Mae Loan - Primary Residence (effective
May 21, 2008) |
A
homeowner who loses a home to Foreclosure is ineligible for Fannie
May backed mortgage for a period of 5 years.
|
A
homeowner who successfully negotiates and closes a short sale
will be eligible for a Fannie Mae backed mortgage after only 2
years. |
|
Future
Fannie Mae Loan - Non Primary
(effective May 21, 2008) |
An
Investor who allows a property to go to Foreclosure is ineligible
for a Fannie Mae backed investment mortgage for a period of 7
years. |
An
investor who successfully negotiates and closes a short sale will
be eligible for a Fannie Mae backed investment mortgage after
only 2 years. |
|
Future
Loan with any Mortgage Company |
On
any future 1003 application, a prospective borrower will have
to answer YES to question C in Section VII of
the standard 1003 that asks, "Have you had property foreclosed
upon or given title or deed in lieu thereof in the last 7 yeras?"
This will affect future rates. |
There
is no similar declaration or question regarding a short sale. |
|
Credit
Score |
Score
may be lowered anywhere from 250 to over 300
points. Typically will affect score for over 3 years. |
Only
late payments on mortgage will show and after sale mortgage will
be reported as paid or negotiated. This will lower the score as
little as 50 points if all other payments are
being made. A short sale's affect can be as brief as 12
to 18 months. |
|
Credit
History |
Foreclosure
will remain as a public record on a person's credit history for
10 years or more. |
Short
sale is not reported on credit history. There is no specific reporting
item for 'short sale'. The loan is typically reported 'paid in
full, settled'. |
|
Security
Clearances |
Foreclosure
is the most challenging issue against a security clearance
outside of a conviction of a serious misdemeanor or felony. If
a client has a foreclosure and is a police officer, in the military,
in the CIA, Security, or any other position that requires a security
clearance, in almost all cases, clearance will be revoked
and position will be terminated. |
A
Short Sale on its own does not challenge most security
clearances. |
|
Current
Employment |
Employers
have the right and are actively checking the credit regularly
of all employees who are in sensitive positions. A foreclosure
in many cases is ground for immediate reassignment or
termination. |
A
short sale is not reported on a credit report and is therefore
not a challenge to employment. |
|
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 employment. |
A
short sale is not reported on a credit report and is therefore
not a challenge to employment. |
|
Deficiency
Judgment |
In
100% of foreclosures (except in those states
where there is no deficiency) the bank has the right to pursue
a deficiency judgment. |
In
some successful short sales it is possible to convince the lender
to give up the right to pursue a deficiency judgment
against the homeowner. |
|
Deficiency
Judgment (amount) |
In
a foreclosure the home will have to go through an REO process
if it does not sell at auction. In most cases, this will result
in a lower sales price and longer time to sale in a declining
market. This will result in a higher possible deficiency
judgment. |
In
a property managed short sale the home is sold at a price that
should be close to market value and in almost all cases will be
better than an REO sale resulting in a lower deficiency. |
