SanDiegoShortSale.TV | Short Sale vs. Foreclosure

Short Sale:

1. Credit Score: Only late payments made on your mortgage will show on your credit report. Once the short sale is completed it will be reported as "settled for less than full amount due." Depending on how long the short sale process takes the credit implications may be wiped out quickly.
2. Credit History: The Short Sale will appear the same as a charge off on a credit card.
3. Future Home Purchase: Short Seller will be eligible for a federally backed mortgage after two years. Lender policy varies.
4. Future Home Investment: Short Seller will be eligible for a federally backed mortgage after two years. Lender policy varies.
5. Deficiency Rights (California): During most sales we are able to negotiate that the lender agree to release the homeowner from any future deficiency claims after the close of escrow.
6. Taxes: The lender may send out a 1099-C to show the income that a homeowner is liable for when they are released from debt. The Mortgage Debt Relief Act of 2007 protects most homeowners from this liability.
7. Employment: Credit history is a large component of background investigations / security clearances.

Versus

Foreclosure:

1. Credit Score: 200-300 point loss in credit score. Score will be affected for 3 years and will appear on the report for 7-10 years.
2. Credit History: Reported for 7-10 years along with the late payments.
3. Future Home Purchase: Minimum 3 years under certain circumstances. Typically 5-10 years until another home purchase.
4. Future Home Investment: Typical minimum of 7 years until you can receive a loan on an investment property.
5. Deficiency Rights (California): Many loans give the lender the right to pursue a deficiency after the foreclosure has taken place.
6. Taxes: The lender may send out a 1099-A to show the income that a homeowner is liable for when they are released from debt.
7. Employment: Credit history is a large component of background investigations / security clearances.