HYPOTHETICAL: if homeowner has balance of 400,000 and property is worth 430,000; clearly this does not have the 30% equity that we’re all looking for. I can probably negotiate with bank to payoff the balance for 300,000.
My question has to do with the homeowner credit.
When people do short sales or as illustraded above, we negotiate with bank for better deal. How would that affect the homeowner’s credit?
I called a bank’s mit dept and posed this question, and they told me it would show up as a settlement on the homeowner’s credit.?? If so, we would be doing a disservice to HO, would you agree?
my opinion is no not a disservice depending on the investor. i offer 3 months rent, a uhaul, a fresh start and overall credit repair so i say its pretty even
After thinking about it, I agree, not a disservice! It just that it was something new for me to find out that the HO credit would still be damaged when we negotiate with banks. It’s something I have to prepare when talking to homeowners. Now I understand when people talk about saving their credit, they mean saving their credit from foreclosure; but not from a settlement.
They told me it would show up as a settlement. How bad are settlements? If we look at the scale from worst to bad, I think it goes something like this: BK, foreclosure, settlement, charge off, paid charge offs, collections, paid collections? Is that how you see it?
you are correct in that order but u forgot about repossessions, another thing you can disclose is that if they ever fill out an application again and it asks if they ever forclosured on a property they can answer no.
as soon as the NOD is processed a lender considers it as a foreclosure for their future purchase. (even though a foreclosure was never executed) the word settlement on their credit will drop their score pretty hard in the first 12 months of it being reported to the bureaus…