Short Sale, Foreclosure and Strategic Default


Saturday, August 25, 2007

Short Sales Effect Credit - Impact of Short Sales on Credit Reports - How Short Sales Affect Credit

Lately I have been getting a lot of questions for California Real Estate owners about how a short sale will effect their credit. I am giving a link to this information because I have found some of this realtors information to be pretty good but not perfect in the past. I have also found many Realtor cite making roughly the same claims about the effect on an upside down homeowners credit. However I rarely see the cite attribute the information to anyone.

Next, I note that this information may be old and getting older. As I have reported elsewhere on this blog it has been reported the Fico people are working to make a short sale and a foreclosure have an equivalent effect on your credit report. It makes sense because a short sale is really no better than a deed in lieu. Finally, I would like to remind people that you really need both a Realtor and an attorney working as a team to create your best solution.

Short Sales Affect Credit - Impact of Short Sales on Credit Reports - How Short Sales Affect Credit

here is a summary of what the realtor resported:

Fico points lost:

* Foreclosure or Deed-in-Lieu of Foreclosure
250 t0 280 points
* Short Sale
80 to 100 points
Waiting Period Before Buying Another Home

* Foreclosure or Deed-in-Lieu of Foreclosure
36 months till you can get a reasonable rate on your loan
* Short Sale
18 months
Please remember to make sure you are crafting your solution to eliminate deficiency judgments and/or tax liablity for loan forgiveness. (something you can do by yourself or with your lawyer) If your Realtor claims to be able to negotiate these agreements for you - it may be a good thing - because imo they will be practicing law without a license. Just make sure they work for a large non indenpendent broker with deep pockets.

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