Tim Tucker is a Certified Distressed Property Expert. This means he is an expert in Short Sales and Foreclosure sales – both representing Sellers and Buyers.
A common question is “Why bother, I’m out of the house in a short sale or a foreclosure?”…. There are good reasons to avoid a foreclosure. Here is a table comparing the consquences for important post sale actions between foreclosure and short sale. The information was provided by the Distressed Property Institute, the certifying body for Distressed Property Experts.
| Future Activity | Foreclosure | Doing a Short Sale Instead |
| Future Fannie Mae Mortgage Primary home |
No Fannie Mae backed mortgage for 5 years | Only blocked for 2 years. |
| Future Fannie Mae Mortgage Secondary Home |
No Fannie Mae backed mortgage for 7 years. | Only blocked for 2 years. |
| Future loan with ANY company. | Your rates will be affected for at least 7 years. | No effect. |
| Credit Score | Your score will drop by 250 to 300 points and stay down for 3 years. |
The only effect will be if you skipped payments. For 12 to 18 months your score may dip 50 points. |
| Credit History | Foreclosures are public records and last on your credit history for at least 10 years or longer. |
Short sales do not go on credit history as “short”. The loan is shown as “paid in full, settled”. |
| Security Clearances | Foreclosure can stop issuance of a security clearance or if you already have one you can lose your clearance. If your work requires a clearance, do NOT foreclose. |
Only the most rigorous clearances will find a short sale, and in most cases it will not affect the clearance. |
| Your current job | Jobs in sensitive positions, where financial stress may make you unqualified for the position, monitor your credit history. Foreclosure could lead to termination. |
They only know if you tell them. |
| Future jobs | Many employers check credit, and a foreclosure can be a leading sign of other troubles. Expect it to be a challenge to future employment. |
They only know if you tell them. |
| Hounding you for more money | You still owe money in a foreclosure. And you can expect banks to come after you if they think you have it. Also, expect the amount to be higher than what you owed because of the drop in value of the property through foreclosure. |
In most short sales, including all that we have done, the bank gives up the right to go after you for more money. And even if they do, the amount is MUCH smaller than with foreclosure. |
Need to sell your home?
We won’t put you on an e-mail list. Or bug you by phone. We just want to know what you need, and we will quickly tell you if and how we can help. Please be specific.
