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Replies (9)
- Daniel Nesemeier, "dnesemeier"
- Contributions:1379
If lienholders are receiving payments on time there is no incentive for them to approve a short sale.
Thus the conundrum.
The classic short sale is a combination of these things:
1) payments have increased to a level that the borrower can no longer afford (ARM reset).
2) the income levels of the borrower have dropped due to layoff, firing, etc.
3) the income levels of the borrower were never enough to satisfy debt service.
This person disagrees with your assessment
Some lenders report a short sale as a foreclosure and some report it as settled without zeroing out the outstanding balance. Equifax does not do the reporting, they simply record what is reported by lienholders, and the lienholders don't have a standard.
We should not be discussing false hope for sellers facing short sale. There IS a negative impact to the borrower and the lienholder.
- sunnyview
- Contributions:25115
Boy, I wouldn't want to take that bet. If you walk away, I think you have to expect that it will hit your credit in some way otherwise you may be in for real shock when they find a way to include it on your credit report.
- Ken Kopper
- Contributions:1578
Short sales show up as a settlement on the credit report just like any other debt that is settlement for partial balance. I handled a purchase for a borrower going through a divorce with the home listed on the market for over 18 months..He has made all the payments on time but budget was very tight. Current lender agreed to short sale, wrote off part of the balance and borrower was preapproved FNMA approve eligible for another purchase.
Very rare to find that scenario and accompanied with a letter of explanation but no problems.
- NTETS, "Mr Caveat"
- Contributions:6436
short sales take months and if you are making your payments your short sale WILL NOT BE APPROVED unless you are in a delinquency... as per DNS
so if your credit score was at 720 and you successfully navigate a SS, do not expect to walk with a credit score over about 520... end of the day after all is said and done, SS is not really much better than forclosure per equifax, expiran and transunion... to the banks though it is much better
- Johnathan Smith, "SINYRealEstate.com"
- Contributions:106
thanks for the information but i the past I seen it on credit reports!
- Mike Satterlee, "Mike Satterlee"
- Contributions:621
Definately depends on how the leinholder reports it. I'm working on one now & part of the negotiation is how the lenders are going to report it - they can call it whatever they want. This is all new territory so I'd be careful about making such difinitive proclemations.
- Jimmy38
- Contributions:234
My short sale was closed and I received a letter from the lender that the loan was paid in full. I had negotiated signing a prommissory note and I'm paying a good chunk back each month. I check my credit report monthly and nothing negative has shown up on my credit report. You are right, it does depend on how you negotiate. I had other reasons to sell when I did it last Feb, I wasn't late on any payments but I had a terminally ill child and orders to transfer. Being Military, there was no way I was going to leave my family behind anymore! There was no way I could rent out the home since there were so many vacant homes in the neighborhood with for rent signs!
- John12377
- Contributions:153
What you say about the late or absent payments affecting your credit score is absolutely right. Other comments like the credit dropping 200 points seems a bit exaggerated especially when a completed foreclosure will only drop you around 150 or so. And I do know that in many cases a lender will accept a short sale even if payments are current.
- Debi Boucher, "debi1054"
- Contributions:23
Here's another point of view re: FICO, and Fannie Mae's new guidelines.
http://homebuying.about.com/od/4closureshortsales/qt/060907SScredit.htm
Short Sales Are NOT Negatively Reported on Credit Reports...!
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- 5.0/5.0
- (2 reviews)
Contributions:69I recently had a discussion with an Equifax executive... They told me Short Sales are NOT negatively reported on a credit report.
Apparently they cannot find any way to report this information. Although they are trying to figure out how to report a short sale, at this time they cannot make a negative report or any report in that matter... on a short sale...
The problem is most short sales result at the end of a domino affect of late payments and a last resort of selling an out of equity property. So the negative information reported are the late payments and the pre-foreclosure/foreclosure information.
If you can negotiate a short sale without late payments you could avoid negative reported information on your credit report. You will have to be very convincing though!
I welcome any comments
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