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Short Sale Credit Effects

The hit on your credit is much bigger if you are foreclosed on rather than completing a short sale


A seller will take a hit of 200 - 300 points depending on overall condition of credit before the foreclosure.  And this is the key.  Before the foreclosure process, there will be another ding on the credit because of the late status of the loan. So the credit gets a double hit.

The time that will be needed to repair the credit is longer after a foreclosure than after a short sale

A seller who wants to buy another home after foreclosure will end up waiting about 36 months before they will be able to get a reasonable interest rate and loan terms. On the other hand, after a short sale probably a seller could have a FICO score suitable to meet Fannie Mae guidelines.

Deficiency Judgements

The law does protect a seller in short sale from income tax on the deficiency payoff of the loan.

However the law does not protect the seller from a judgement for the amount of the loan pay off that was not paid at the closing. Sometimes a lender will agree that they will not seek a deficiency judgement as part of the short sale negotiation.

Before selling your property on a short sale, it is important to seek advice from an attorney and or an accountant.

Please don't hesitate to call us.  We have certified foreclosure specialists waiting to help!  We can be reached at 513.766.3888 or you can Email The Meadows Team.