The similarities and differences between foreclosures and short sales can often appear blurred. Although the two terms are often used in conversation together, there are significant differences.
One way that to leverage yourself with the most up-to-date information and resources is by working with a Certified Distressed Property Expert® – a real estate professional with specific understanding of the complex issues confronting the real estate industry. Through comprehensive training and experience, CDPEs are able to provide solutions for homeowners facing hardships in today’s market, specifically short sales.
The prospect of foreclosure can be financially and emotionally devastating, and often homeowners proceed without guidance of any kind. They have the tools needed to help homeowners find the best solution for their situation. Often, when other options have been exhausted, CDPEs can help homeowners avoid foreclosure through the efficient execution of a short sale.
This is just another benefit to you in working with East Bay Homes.
The chart below also assists in clarifying common misconceptions that will assist you in making an informed and educated decision.
|Fannie Mae Guidelines – Primary Residence||Eligible for a Fannie Mae insured loan after 3 years, no restrictions||Eligible with restrictions after 5 years, no restrictions after 7 years|
|Fannie Mae Guidelines – Non Primary Residence||An Investor who has done a short-sale is eligible for a Fannie Mae backed mortgage after 3 years||An investor who has had a property foreclosed cannot get a Fannie Mae backed loan for 7 years|
|Credit Score||Late payments on mortgage will show after completion of the short-sale. The effect can be as short as 12 to 18 months. Depending on how the lender reports it, credit scores affected negatively 50-100 points.||Typically will affect credit score for at least 3 years. Scores will be negatively affected between 200 and 300 points.|
|Credit Application Questions (Form 1003)||No questions regarding a short sale.||Question C, Section VIII: Have you had property foreclosured upon or given title or deed in lieu thereof in the last 7 years?|
|Credit History||Depending on how long lender reports it, short-sales may not be reported on a credit history.||Remains as a public record for 10 years or more.|
|Security Clearance||A short-sale does not usually raise red flags regarding security clearance.||Security clearances will usually be revoked, often times resulting in loss of employment.|
|Deficiency Judgment||This is a negotiable issue between the seller and the lending institution.||No negotiations between Homeowner and lending institution. It is up the lender (or lenders) whether to file a deficiency judgment.|
|Deficiency Judgment Amounts||If there is a deficiency judgment, the amount is usually lower if the property has been sold through a short sale.||The foreclosure process usually will cost the lending institution more, hence resulting in a larger deficiency judgment if the judgment is filed.|
Information obtained from sources other than Broker that are deemed accurate, but have not been verified by Broker. Information is subject to change. All interested persons should independently verify accuracy of the above information. Individual effects may vary, therefore obtaining the advice of legal counsel is recommended.