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FORECLOSURE VS SHORT SALE |
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Homeowner Consequences |
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| ISSUE |
FORECLOSURE |
SUCCESSFUL SHORT SALE |
| Future Fannie Mae Loan- |
A homeowner who losa a home to foreclosure |
A homeowner who successfully negotiates and |
| Primary Residence |
is ineligible for a Fannie Mae backed mortgage |
closes a short sale will be eligible for a Fannie |
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for a period of 5 years. |
Mae backed mortgage after 2 years |
| Future Fannie Mae Loan- Non |
An investor who allows a property to go to |
An investor who successfully negotiates and |
| Primary Residence |
foreclosure is ineligible for a Fannie Mae backed |
closes a short sale will be eligible for a Fannie |
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investment mortgage for a period of 7 years |
Mae backed mortgage after 2 years |
| Credit Score |
Score may be lowered anywhere from 250 to |
Late payments on mortgage will show, and after |
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more than 300 points. Typically will affect a |
sale, mortgage is normally reported as "paid as |
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credit score for over 3 years. |
agreed", "paid as negotiated", or "settled". This |
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can lower the score as little as 50 points if all |
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other payments are being made. A short sale's |
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affect can be as brief as 12-18 months. |
| Credit History |
Foreclosures will remain as a public record |
A short sale is not reported on a credit history. |
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permanently, and on a person's credit history |
There is no specific reporting item for "short |
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for 10 years or more. |
sale". The loan is typically reported "paid in full, |
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settled". |
| Security Clearance |
Foreclosure is the most challenging issue against |
On its own, a short sale does not challenge |
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a security clearance outside of a serious |
most security clearances. |
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misdemeanor or felony conviction. If a client has |
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a foreclosure and is a police officer, in the military, |
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in the CIA, security or any other position that |
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requires a security clearance, in almost all cases |
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clearance will be revoked and position will be |
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terminated. |
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| Current Employment |
Employers have the right and are actively |
A short sale is not reported on a credit report |
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checking the credit of all employees who are in |
and is therefore not a challenge to employment. |
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sensitive positions. In many cases, a foreclosure |
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is reason for immediate reassignment or |
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termination. |
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| Future Employment |
Many employers are requiring credit checks on |
A short sale is not reported on a credit report |
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all job applicants. A foreclosure is one of the |
and is therefore not a challenge to future |
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most detrimental credit items an applicant can |
employment. |
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have (besides bankruptcy/charge off) and in |
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most cases will challenge employment. |
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| Deficiency Judgement |
In 100% of foreclosures (except in non-deficiency |
In some successful short sales, it is possible to |
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judgement states), the bank has the right to |
convince the lender to sign a release and give |
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pursue a deficiency judgments. Nevada is |
up their right to pursue a deficiency judgment |
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a deficiency judgement state. |
against the homeowner. |
| Deficiency Judgement (amount) |
In a foreclosure, the home will have to go through |
In a properly managed short sale, the home is |
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and REO process if it does not sell at auction. |
sold at a price that should be close to market |
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In most cases this will result in a lower sales |
value, and in almost all cases will be better than |
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price and longer time to sell in a declining market. |
an REO sale resulting in a lower deficiency. |
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This will result in a higher possible deficiency |
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judgement. |
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| Deficiency Judgement (statute |
In a foreclosure, the first mortgage holder has 6 |
If the mortgage holder does not release their |
| of limitations). |
months to file for a deficiency judgement (the |
right to pursue a deficiency judgment they |
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second mortgage holder has 6 years). |
have up to 6 years to file and seek a deficiency |
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judgment. |
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| FIDELITY NATIONAL TITLE AGENCY OF NEVADA |
