Issue              

 Foreclosure         

 Successful Short Sale

 Future Fannie Mae Loan-
Primary Residence

 A homeowner who loses a home to Foreclosure is usually ineligible for a Fannie Mae backed mortgage for a period of 3-5 years.

 A homeowner who successfully
negotiates and closes a short  sale will be eligible for a Fannie
Mae backed mortgage after only 2-3 years.

 Future Fannie Mae Loan-
Non Primary

 An investor who allows a property to go to Foreclosure is ineligible for a Fannie Mae backed investment mortgage for a period of 5-7 years

An investor who successfully negotiates and closes a short sale will be eligible for a Fannie Mae backed investment mortgage after only 2-3 years. 

 Future Loan with any
 Mortgage Company

 On any future loan application, a prospective borrower will have to disclose that you had a property foreclosed on in the last 7 years. 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 2-3 years.

Only late payments on mortgage will show and after a sale. The 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 7 years or more.

Short sale is not reported on a credit history. There is no specific reporting item for ‘short sale’. The loan is typically reported ‘paid in full, settled’ or negotiated payment’.

 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 typically 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 most successful short sales it is possible to convince the lender to give up the right to pursuit a deficiency judgment against the homeowner. In California, laws through 12/31/2012 can prevent this deficiency.

 Deficiency Judgment

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 properly 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. In California, laws through 12/31/2012 can prevent this deficiency.