Short sale credit damage

Foreclosures, Short Sales, Tax Foreclosures
1

Does anyone know how a short sale affects the sellers credit compared to a foreclosure? Typically, how long would they have to wait before qualifying for another loan assuming they get their financial situation straightened out?

Thanks,
Mark

2

It can cause a lower score if the lender does not report it as paid in full. Some report it as a charge off or short pay, which defeats our goal of helping the seller. Basically, we want them to report that the loan is paid and the seller doesn’t owe them money.

Read the section that answers how it affects their credit:
http://www.creonline.com/articles/art-240.html

3

Their credit is screwed up the moment they go into forelcosure. Short sale is just a band aid on it.

4

Thanks for the info. I am working on my first short sale and wanted to be able to advise the sellers correctly about how this would affect their credit.

5

I agree that their credit is not the best once they are late, but a charge-off is worse. If you can help it, negotiate with the bank to have them report the account as paid in full.