The Shocking Difference Between 

 

FORECLOSURES &  SHORT SALES

 

A Short Sale is a Special Transaction that allows a home owner to sell their property for less than what they owe. It is a negotiated settlement that occurs when a lender agrees to accept less than the amount owed to a payoff of a home loan as an alternative to a foreclosure. .

A Foreclosure is when a homeowner defaults by failing to make payments on his or her mortgage, the bank or financial institution that holds the mortgage note may foreclose on the property. Foreclosure gives the legal ownership of a property to the bank to allow the bank to recoup its investment.

Take a look at these issues within Foreclosure and Short Sales.

Issue: Future Fannie Mae Loan for a Primary Residence

FORECLOSURE: A homeowner who loses a home to Foreclosure is ineligible for a Fannie Mae backed mortgage for a period of 5 Years.

SHORT SALE: A homeowner that successfully negotiates and closes a Short Sale is eligible for a Fannie Mae backed mortgage after 2 Years.

Issue: Future Fannie Mae Loan for Non-Primary Residence

FORECLOSURE: An Investor who allows a property to go to Foreclosure is ineligible for a Fannie Mae backed loan for 7 Years.

SHORT SALE: An Investor who successfully negotiates and closes a Short Sale will be eligible for a Fannie Mae backed investment loan after 2 Years.

Issue: Future Loan with any Mortgage Company

 FORECLOSURE: On any future 1003 Application, a prospective borrower will have to answer YES to question C in Section VIII of the Standard 1003 that asks, "Have you had a property foreclosed upon or given title or deed in lieu thereof in the last 7 years?" this will in turn, affect future rates.

SHORT SALE: The is no similar declaration or question regarding a short sale.

Issue: Credit Score

FORECLOSURE: Score may be lowered anywhere from 250 to OVER 300 Points! A Foreclosure will affect your Credit Score for over 3 Years.

SHORT SALE: Only late payments on a 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 12-18 Months.

Issue: Credit History

FORECLOSURE: Foreclosure will remain as a public record on a person's Credit History for 10 Years.

SHORT SALE: IS NOT REPORTED ON A CREDIT HISTORY. There is no specific reporting item for ‘short sale’. The loan is typically reported as ‘paid in full’ or ‘settled’.

These are just some of the Issues that are most important to an individual who wants to move on after choosing what they might do if they are facing this situation.

DON’T LET TIME RUN OUT if you or anyone you know is Facing Foreclosure.

The Kevin Hildebrand Team CAN help.

Click Here if you would like additional Information on our Short Sale Program.

 

This Information is from the Distressed Property Institute, LLC

PLEASE CONSULT LEGAL ADVICE REGARDING ANY TAX QUESTIONS.