Security
Clearances:
Foreclosure
– Foreclosure is the most challenging
issue against a security clearance outside of a conviction of a serious
misdemeanor or felony. If a client has a foreclosure and is a police officer,
in the military, in the CIA, Security, or any other position that required a
security clearance in almost all cases clearance will be revoked and position will be terminated.
Successful
Short Sale – A short sale on its own does
not challenge most security clearances.
Current
Employment:
Foreclosure
– Employers have the rights and are actively checking the credit regularity of
all employees who are in sensitive positions. A foreclosure in many cases is
ground for immediate reassignment or
termination.
Successful
Short Sale – A short sale is not reported on a credit report and is
therefore not a challenge to employment.
Future
Employment:
Foreclosure – Many employers are
requiring credit checks on all job applicants. A foreclosure is one of the most
detrimental credit items an applicant can have and in most cases will challenge employment.
Successful
Short Sale – A short sale is not reported on a credit report and is
therefore not a challenge to employment.
Deficiency
Judgment:
Foreclosure
– in 100% of foreclosures (except in
those states where there is no deficiency) the bank has the right to pursue a
deficiency judgment.
Successful
Short Sale – In some successful short sales it is possible to convince the
lender to give up the right to pursue a
deficiency judgment against the homeowner.
Deficiency
Judgment (amount):
Foreclosure
– In a foreclosure the home will have to go through an REO process if it does
not sell at auction. In most cases this will result in a lower sales price and
longer time to sell in a declining market. This will result in a higher
possible deficiency judgment.
Successful
Short Sale – In a properly managed short sale the home is sold at a price
that should be close to market value and in almost all cases will be better
than an REO sale resulting in a lower
deficiency.
Future
Fannie Mae Loan (Primary Residence):
Foreclosure
– A homeowner who loses a home to foreclosure is ineligible for Fannie Mae
backed mortgage for a period of 5 years.
Successful
Short Sale – A homeowner who successfully negotiates and closes a short
sale will be eligible for a Fannie Mae backed mortgage after only 2 years.
Future
Fannie Mae Loan (Non Primary Residence):
Foreclosure
– An investor who allows a property to go to foreclosure is ineligible for a
Fannie Mae backed investment mortgage for a period of 7 years.
Successful
Short Sale – An investor who successfully negotiates and closes a short
sale will be eligible for a Fannie Mae backed investment mortgage after only 2 years.
Future
Loan with any Mortgage Company:
Foreclosure
– On any future 1003 application, a prospective borrower will have to answer YES to question C in Section VIII of
the standard 1003 that asks “Have you had property foreclosed upon or given
title or deed in lieu thereof in the last 7 years?” this will affect future
rates.
Successful
Short Sale – There is no similar declaration or question regarding a short
sale
Credit
Score:
Foreclosure
– Score may be lowered anywhere from 250
to over 300 points. Typically will affect score for over 3 years.
Successful
Short Sale – Only late payments on mortgage will show and after sale
mortgage will be reported as paid or negotiated. This may lower the score as
little as 50 points if all other
payments are being made. A short sale’s affect can be as brief as 12 to 18 months.
Credit
History:
Foreclosure
– Foreclosure will remain as a public record on a person’s credit history for 10 years or more.
Successful
Short Sale – Short sale is not
reported on a credit history. There is no specific reporting item for
‘short sale’. The loan is typically reported ‘paid in full, settled’.
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