Posts Tagged “Credit”

I want to know the real answer regarding penalties of Foreclosing and Short selling a home. Mortgage is paid up to date, only problem is its not selling on the market.

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I’ve read past answers to this question but the market has changed. Banks are struggling to get bad debt off the books. How are Short Sales being handled today now that there is no tax penalty? (Ref. Mortgage Forgiveness Debt Relief Act of 2007 and Emergency Economic Stabilization Act of 2008) How is it being reported to credit agencies by the banks these days?

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How do “short sales” impact your credit? And, how do they work?

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Does a Short Sale Show Up on Your Credit as a Foreclosure?


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Home Page > Finance > Mortgage > Does a Short Sale Show Up on Your Credit as a Foreclosure?

Does a Short Sale Show Up on Your Credit as a Foreclosure?

Posted: Jan 25, 2010 |Comments: 0
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If you are trying to avoid a foreclosure with a short sale one of the biggest questions you may be faced with is whether or not your credit will be affected in the same way as a foreclosure.

After all you are making the effort to avoid foreclosure so it shouldn’t affect your credit as much, right? The answer to that can be dependent upon the state you live and the terms of your mortgage agreement, however in general a short sale can affect your credit as much or maybe a little less than a foreclosure would.

Hector Milla Editor of the “Best Loan Modification Companies” website — http://www.BestLoanModificationCompanies.com — pointed out;

“…You can rest assured though that a short sale does not appear on your record as a foreclosure and it does not stay on your record as long as a foreclosure would. You can expect to see a short sale fall off your record upwards of three years; however you can begin to reverse the negative effects of a short sale after the first year…”

A short sale is really a catch 22 when it comes to saving your credit record. In order to be approved from your lender to do a short sale you have to prove that you have no way of fulfilling the loan agreement. In order to do this you must submit bank statements, liquidate all of your assets, and show a profit and loss statement if you own your own business. On the other hand, in order to avoid foreclosure you must remain current on your mortgage payments until the short sale commences. In this current economy this could take upwards of six months. If you are qualified for a short sale then you obviously do not have the funds to maintain your mortgage payments and therefore after six months you will be well on your way to a foreclosure.

Another drawback to doing a short sale is that your mortgage lender has the right to hold a deficiency judgment to try and reclaim the money lost in the short sale. If the judgment is upheld you may need to pay back the remainder of the loan that was not recovered in the short sale. For example if you owed $325,000 and you sold the home at a short sale for $225,000 you may still be responsible for the additional $100,000 plus any real estate fees that were assessed.

“…The best thing for you to do if you are in a situation is to contact a foreclosure assistance company. They will be able to assess your monthly income and debts and try to come up with a solution to help find the best solution for your situation. They will also negotiate with your mortgage company on your behalf to try and modify your loan or achieve a short sale, deed in lieu, or cash for keys…” H. Milla added.

Further information about how to get professional assistance with a mortgage loan modification by http://www.BestLoanModificationCompanies.com

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How long does short sale affect your credit?
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What are tax implications of short sale ?

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Article Tags:
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The Effect Of Doing A Short Sale On Your Credit Rating


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Home Page > Finance > Real Estate > The Effect Of Doing A Short Sale On Your Credit Rating

The Effect Of Doing A Short Sale On Your Credit Rating

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Posted: Feb 15, 2010 |Comments: 0
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Homeowners who are having problems in their finances and facing foreclosure often decide to short-sell their home in order to avoid the foreclosure process. This is exactly the condition now in the real estate market where the sub prime adjustable rate mortgage problem has created large-scale foreclosures and tremendously dragged the value of real estate down. Short selling your real estate property may affect your credit rating. For this reason you should know exactly how this deal can affect your credit. Many homeowners have decided to short-sell their properties without considering the its impact and if you wonder how it can affect your credit ratings most of what you need to know is that the negative effect of real estate short sale will be a lot better than the effect of foreclosure.

Commonly, a foreclosure will get your credit rating to plunge down 200 to 300 points and may take considerably longer to reestablish your credit rating once your financial troubles are worked out. A pre-foreclosure FICO score of 675 could go down to as low as 395, basically disqualifying you from future credit approvals. Not only that, it may take three years before you can get another home loan.

In a short sale, expect to see some credit score damage, but not as much as the credit score damage of foreclosure. The damage on your FICO points will be somewhere around 75-125 and it will appear on your report as a pre-foreclosure in redemption which is not as bad as the negative impact of foreclosure. While short sales can save you money in the short term, they can surely hurt you in the future in terms of credit. You will most likely be able to secure a new home loan in about a year and a half, depending on the standing of your credit payments and what the credit report shows.

The effect of short sale on your credit report entirely depends on any agreement made with your mortgage lender. You need to negotiate a deal with the bank or your mortgage lender, otherwise, the report will be considered closed and the loan was not completely paid. This can have a damaging impact on your credit rating. You need to negotiate how it is going to be reported to the credit reporting authorities. You may need the services of a lawyer to help you negotiate with your lender.

Unlike the impact of foreclosure, short salling your property can still have a considerable impact on your credit rating. The difference is its effect on your credit rating is much nicer than a foreclosure and it can be even better if the way it is reported is negotiated with your lender. And in addition, do not consider going it alone. It would be better to consult with a lawyer, your accountant or a good real estate agent who is knowledgeable in short selling. You may need to hire any of these professionals to have the right counsel before committing to a real estate short sale deal.

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Tucson Homes for Sale offer a wide range of amenities. Tucson Luxury Real Estate is located near beautiful surroundings. Tucson Recent Construcion Homes for Sale add fresh appeal to the community.

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How long does short sale affect your credit?
I was denied a Hamp mod due to NPV caculations. My lender will not explain these terms to me. They said they cannot help me. I need to short sale and get out. Can u please help me
What are tax implications of short sale ?

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Tucson Homes for Sale offer a wide range of amenities. Tucson Luxury Real Estate is located near beautiful surroundings. Tucson Recent Construcion Homes for Sale add fresh appeal to the community.

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I would like to short sale the property I stay in, but the person who is on the mortgage (my business partner) does not want to hurt his credit…so he is afraid to sale the property for less than what is owed. The property needs a lot of work and is not worth what is owed and the mortgage payments are barely making it in on time. The bank will not do a modification. Is there anyway to short sale your property and not have a negative mark on the credit afterwards?

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Short Sales and Credit Scores - Short Sale Education


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Short Sales and Credit Scores - Short Sale Education

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Short Sales and Credit Scores - Short Sale Education

By: Art Lee

About the Author

For more information on becoming a Short Sale Education Leader in your community, join WHB Solution’s community of Short Sale Success and Short Sale Classes and join short sale experts at www.whbsolutions.com/members.

 

(ArticlesBase SC #2896847)

Article Source: http://www.articlesbase.com/ - Short Sales and Credit Scores - Short Sale Education





A couple of months ago, I wrote the blog “Bankruptcy, Foreclosure, or Short Sale? What happens to my Credit Score?” This month, I’d like to give an update on Short Sales and Credit Scores.

 

Credit Score:Drops score approximately 60-100 points

Length of Time on Credit Report:7 years

Buying Another Home: Qualify for a mortgage with a decent interest rate after 18-24 months

 

Note: There are several caveats when it comes to a short sale because short sales are relatively new and credit bureaus are still trying to figure it into their credit risk modeling. In fact, in the future, it has been analyzed that some lenders may look at a short sale the same as a foreclosure.

 

•        Above states an 60-100 point hit for a short sale and this hit does depend on how many payments were missed prior to the completion of a short sale

 

•        For a short sale, it has been reported that a credit report will show Satisfied with a note that states “Creditor settled for less than the amount due”. If you are lucky, you will just get “Paid In Full”. This does not happen often. Most likely, a short sale will show as a charge off or a settlement

 

•        Lenders using the Fannie Mae and Freddie Mac mortgage approval system will see mortgage payments that are 120 days late or receipt of a Notice of Default the same as a foreclosure

 

•        Many lenders may not consider a short sale unless the homeowner is late, but more are considering a short sale even if the homeowner is not late with a convincing and full proof of a hardship

 

Homeowners who have a mortgage under water are more inclined to try a short sale ‘’short sale” before throwing their hands in the air and going to foreclosure or go through bankruptcy. In 2009, the National Association of Realtors estimated that about ten percent of all sales last year were short sales and it is expected to increase this year.

 

With Obama’s HAFA program, lenders are provided incentives to perform short sales and so are homeowners because under this program they would receive $1500 for relocation costs.

 

There is still a lot of confusion around how a Short Sale Secrets will affect a borrower’s credit score. It really depends on how many lates a homeowner has had on their mortgage and how the lender decides to report it to credit agencies, Experian, Equifax, TransUnion.

 

The main point that homeowners should realize is that if they are successful on doing a short sale to get out of their situation, the road to credit recovery is shorter than if they went to foreclosure. Protecting ones credit score will help to minimize the amount of interest a borrower pays on credit cards an loans.

 

It has been reported that a homeowner would be able to buy a home after 2-3 years, given they continue to work on their credit after a short sale. If they went to foreclosure, they would have to wait as long as 7 years.

 

Many homeowner are frustrated on figuring out how to resolve their mortgage being underwater and many are just walking away but this is a mistake. A homeowner can ask for a short sale even if they are not late on their mortgage, but the reality is that a lender has no incentive to allow a short sale if payments are still being made on time.

 

There are some states that do not allow lenders of 1st mortgages to pursue a seller for the unpaid balance. But in all states, second liens and equity credit lines can pursue the seller unless an agreement has stated otherwise. Borrowers will have to pay tax of any unpaid mortgage balance unless they meet IRS’s home exclusion or insolvency rules. Owners of second or investment properties do not qualify for the home exclusion rules.

 

Look out for our future blogs/articles from our Short Sale Leadership Series content.To view our blog updates, visit www.whbsolutions.com/blog.

 

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(ArticlesBase SC #2896847)

Art Lee -
About the Author:

For more information on becoming a Short Sale Education Leader in your community, join WHB Solution’s community of Short Sale Success and Short Sale Classes and join short sale experts at www.whbsolutions.com/members.

 

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bank of america short sale timeline, short sale listing, short sale classes, short sale education, short sale program, short sale success, short sale trends, short sales, foreclosure, real estate agents, short sales opportunities

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Use of this web site constitutes acceptance of the Terms Of Use and Privacy Policy | User published content is licensed under a Creative Commons License.
Copyright © 2005-2010 Free Articles by ArticlesBase.com, All rights reserved.

For more information on becoming a Short Sale Education Leader in your community, join WHB Solution’s community of Short Sale Success and Short Sale Classes and join short sale experts at www.whbsolutions.com/members.

Comments No Comments »

After waiting 4 months for this Short Sale with 2 mortgages deal to work, I am at a lost road as a buyer.

1st Bank approved the offer with letter to also credit 3% to buyer for closing cost.
After agreed verbal to accepting $4500 as a final payoff of $30,000 2nd mortgage seller debt, the 2nd Bank decided to question the 3% credit and refuse to issued approval letter to close the deal.

Finally, 1st Bank approval must be closed in 2 weeks, but 2nd Bank playing hard balls.
Is there anything we could do the make it work, has it happen to any Realtor out there.

Comments 1 Comment »