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What you need to know to make an informed decision |
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Item |
Short Sale |
Foreclosure |
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Fannie Mae Guideline |
Eligible for new Fannie Mae insured loan after 2 years, no restrictions. |
Eligible for a new Fannie Mae loan with restrictions after 5 years, no restrictions after 7 years. |
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Fannie Mae Guideline (Non- Primary Residence) |
An investor who has done a short sale is eligible for a Fannie Mae backed mortgage after 2 years. |
An investor who has had a property foreclosed cannot get a Fannie Mae backed loan for 7 years. |
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Credit Score |
Late payments on mortgage will show after completion of the short sale. |
Typically will affect credit scores for at least three years. Scores may be negatively affected between 200 and 300 points. |
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New Credit Application Question (Form 1003) |
No questions on application regarding a short sale. |
Questions: Have you had property foreclosed upon or given title or deed in lieu thereof in the last 7 years? |
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Credit History |
Depending on how lender reports it, a short sale may not be reported on a credit history. |
Remains as a public record for 10 years or more. |
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Security Clearance |
A short sale does not usually raise red flags regarding security clearance. |
Security clearances will usually be revoked, often times resulting in loss of employment. |
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Deficiency Judgement |
This is a negotiable issue between the Seller and the lending institution. |
No negotiations between the Home- owner and lending institution. It is up to the lender (or lenders) whether to file a deficiency judgement. |
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Deficiency Judgement |
If there is a deficiency judgement, the amount is usually lower if the property has been sold through a short sale. |
The foreclosure process usually will cost the lending institution more, hence resulting in a larger deficiency judgement if the judgement is filed. |
