Townhomes in Deer Park Illinois
There are so many reasons why a Short Sale is better than a Foreclosure. About 80% of the foreclosures last year never even had thier home listed to try and sell it and save part of their credit. Many homeowners facing foreclosure don’t know about or Short Sales.
In speaking with a client that is facing foreclosure, they have three options. First I suggest that they speak with the lender to see if they can do a loan modification. There are companies that do loan modifications, I am also considering it to help people or they can go directly to thier lender which many of them have loan modification departments already set up and easy to work with. The second would be to list their home as a short sale if they don’t qualify for a loan modification. Then third would be to let the lender foreclose on their home. That should be their last resort.
Some of the comparison for Short Sale vs Foreclosure (you can see the Short Sale is a better choice)
|Issue||Foreclosure||Successful Short Sale|
|CurrentEmployment||Employers have a right toCheck credit if the employee
Is in a sensitive position. They
Can be reassigned or terminated
In the case of foreclosure.
|Not a challenge to employmentA short sale is not reported on a credit
|Future Employment||This is challenging for employment.Many employers check credit on
Applicants, the foreclosure is one of the
Most detrimental credit items.
|Not a challenge to employment as it isNot reported on a credit report.|
|SecurityClearances||Outside of a conviction of a seriousMisdemeanor or felony a foreclosure is
The most challenging issue against a
Security clearance. In many cases if a
Client Is in a position that requires a security clearance, clearance will be
revoked and a position will be terminated
|A Short Sale does not challenge mostSecurity clearances on its own.|
|Credit History||A Foreclosure stays on a person’s creditHistory for 10 years or more.||Not Reported on credit historyNo specific reporting item for “Short Sale”
on a loan, typically it is reported as “paid
in full, settled”.
|Credit Score||Score is affected typically for over 3 yearsAnd is lowered from 250 to over 300
|Score is affected as little as 12 to 18 mos.As little as 50 points as long as all other
Payments are being made. Only late
Payments will show & after sale “paid in
Full or negotiated”.
|DeficiencyJudgment||In states that are deficiencies in 100% ofForeclosures the bank has the right to
pursue a judgment.
|It is possible to convince the lender toGive up the right to pursuit a
deficiency judgment against the borrower in some successful short sales.
|Typically a much higher amount due to the home going through an REOprocess if it does not sell at an auction
(which usually also ends up being a lower
sale price), and longer time to sell in a
|If a Short Sale is properly managed theHome is sold much closer to market value.
In most cases it is a lower deficiency
Because of the lower loss to the lender.
|On any 1003 application a prospectiveBorrower will have to answer “Yes” to
“Have you had property foreclosed upon
Or given deed in lieu thereof in the last 7
Years?” This will effect rates.
|There are no questions regarding aShort Sale.|
|Future FannieMae Loan –
|If a homeowner loses a home to foreclosure they are ineligible for a Fannie Mae backed mortgage for 5 years.||After 2 years of a successfully negotiated and closed short sale the homeowner isEligible for a Fannie Mae backed mortgage.|
|An investor that loses an investmentProperty due to foreclosure is ineligible for a Fannie Mae backed investment mortgage for 7 years.||After 2 years of a successful negotiatedAnd closed short sale the investor will be eligible for an investment mortgage backed by Fannie Mae after 2 years.|
Pre-foreclosures and foreclosures are happening in all price ranges in all areas, and are affecting all of us to a certain degree. If you or anyone you know would like a no obligation confidential consultation with me, just contact me and I would be happy to help you.
Posted By: Julie Anne – The Julie Anne Real Estate Team at Keller Williams Success Realty