We recently sent out a newsletter with the below information and found that it was appreciated and well received by our clients and friends.
Many people have no idea what the difference is between a short-sale or a foreclosure when it comes to the damage done to your credit rating. Sometimes it's not as bad as it seems. We are interested in helping anyone who is facing this kind of crisis in Myrtle Beach, and we'd like to urge you to contact us. We may be able to help you to save your credit or get out from under the burden of a too-big mortgage. We handle Myrtle Beach foreclosures every day and truly want to help!
|Issue||Foreclosure||Successful Short Sale|
|Future Fannie Mae Loan- Primary Residence||A homeowner who loses a home to Foreclosure is ineligible for a Fannie Mae 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 Fanne 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 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 mortgage application (1003), a prospective borrower will have to anser YES to question C in Section VIII that asks "Have you had a property foreclose upon of given title or deed in lieu thereof in the last 7 years?" this will affect your future mortgage rates||There is no similar declaration of question regarding a short sale|
|Credit Score||Score may be lowered anwhere from 250 to over 300 points||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 sales affect can be as brief as 12-18 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 a credit history. There is no specific reporting item for 'short sale.' The loan is typically reported 'paid in full, settled'|
|Deficiency Judgment||In 100% of foreclosures (except in those states where there is no deficiency) the bank has the right to pursue a defiency judgment||In some successful short sales it is possible to convince the lender to give up the right to pursuit a deficiency judgment against the home owner|
|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 sale price and longer time to sell in a delclining 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 the market value and in almost all cases will be better than an REO sale resulting in a lower deficiency|
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