Short Sales
Who decides if my home should undergo a foreclosure or a short sale?
In both short sales and foreclosure, the decision is made by the mortgage holder. They have the right to refuse any short sale.
In order for a lender to agree to a short sale, you have to prove that you have no other way to pay the lien. The lien holder must also believe that the amount received from the sale is the fair market price.
This may save you the more damaging credit implications of a foreclosure. If the Lender believes they can receive more by foreclosing and selling it themselves, they will not agree to a short sale.
How does a short sale versus a foreclosure affect the deficiency judgment?
In some cases, the lender may give up the right to pursue a deficiency judgment against you.
If the lender does pursue some or all of the shortfall from you, the amount is typically much lower than what is owed. It can many times be negotiated.
In all Delaware foreclosures, the bank has the right to file a deficiency judgment against you.
Other People Have Asked:
How will this affect my credit score?
Following a successful short sale your mortgage will be reported on your credit score as either paid or negotiated. This will result in lowering your score as little as 40 points. It will affect you for only 12 to 18 months.
After a foreclosure, however, your credit score can lower as much as 300 and usually at a minimum of 250 points. It can affect one’s ability to purchase a home for up to 7 years.
After foreclosure, you are ineligible for a Fannie Mae backed mortgage for a period of 5 years. An investor who allows a property to go into foreclosure is ineligible for a Fannie Mae backed mortgage for 7 years.
How will this affect my credit history?
There is no specific reporting item for “short sale”.
The loan is typically reported as “paid in full”, “account settled for less than owed” or “closed, deficiency balance accepted”.
A foreclosure will remain on your credit history for 10 years or more and will remain as
What will be the effects on my future loans?
For most mortgage lenders you will not be asked to declare or be questioned regarding a short sale on any standard loan application (1003).
In regards to foreclosure, you will be asked on any future standard loan application (1003) if you have had a property foreclosed in the last seven years, therefore affecting your rate.
Fannie Mae backed mortgages may be available to you following a short sale after two years.
Fannie Mae backed mortgages will not be available to you for at least five years if you have lost your home due to a foreclosure. There is no similar declaration or question regarding a short sale.
How long will I have to wait to buy another home?
After a foreclosure, you may end up waiting another 4 to 7 years before a mortgage lender considers you “bankable”.
Most homeowners who have undergone a short sale may get a reasonable interest rate. In addition, they may be eligible for a loan in as little as 18 months.
However in most cases, one can obtain conventional mortgage financing within 2 to 3 years of completing the short sale.