Does a short sale affect an owners credit?
HOW WILL A SHORT SALE AFFECT THE SELLER'S CREDIT HISTORY?
Foreclosures will ruin a seller's credit for seven years. Short sales on the other hand, may not hurt the seller's credit at all. Lenders will show the loan "paid in full." Occasionally a lender will show the loan as "settled." Although "settled" is considered a negative item, it won't usually cause a person to be rejected on an application. Borrowers may want to try and negotiate how the lender will report the short sale to credit reporting agencies.
HOW SHOULD YOU APPROACH THE BANK?
There is a certain process for calling the bank when doing a short sale, and negotiating a short sale with the lender can be a difficult process. This is because it's often daunting to find a bank officer who has the authority to accept a discount. Generally, you will want to talk to someone in the lender's "Loss Mitigation Department" or a department with a similar name/function. When you call the bank, you never want to tell them you are an investor. This can often result in the lender not accepting the short sale. When you call the lender, request "the short sale packet" or workout the packet and tell them you represent the homeowner. When the packet arrives, it will explain exactly what you need to make the short sale successful.
If you have other questions, or would like to know more about how to sell your home as a short sale, or how to buy a short sale, please feel free to e-mail me afinney@apr.com.
Your questions will be answered promptly and privately, and you can be assured that no future e-mails will be sent to you beyond your initial query unless requested otherwise.
Reprinted from Chicago Title, Montclair, Oakland, CA. Information deemed to be reliable but not guaranteed.
