Jared Kallen

Short sales do not show up under public records and once the short sale is completed successfully, all that will show on your credit will be the late payments to the mortgage and the statement “settled for less than full amount due” (or similar verbiage). Depending on the rest of your credit, the score may only be affected by as little as 50 to 60 points.

Only the late payments will be reported on your credit. The short sale will appear the same as a charge off on a credit card and will be reported as “settled for less than full amount due” (or similar verbiage).

Per Fannie Mae, if an individual completes a short sale they will be able to purchase a home after 2 years (depending on credit score and how they have maintained the rest of their credit)

Per Fannie Mae, if an individual completes a short sale they will be able to purchase a home after 2 years under current Fannie Mae guidelines. **

** NOTE – Fannie Mae is currently the largest insurer of residential mortgages with Freddie Mac as the second. Freddie Mac’s guidelines are typically the same as Fannie Mae.

When completing a loan application in the future for a purchase of a home the borrower will have to answer YES to the question (C, section VIII) “have you had property foreclosed upon or given title or deed in lieu thereof in the last 7 years?”  For those 7 years the type of loan or rate you receive may be affected by this.

Depending on the type of loan, California laws allow for the lender in some instances to pursue the homeowner for a deficiency.  (Consult an attorney for up to date laws)

The sales price in a short sale is typically at market value or just below. In most cases, the amount of the right off is smaller than in a foreclosure, which would result in a smaller amount that the lender could pursue if a deficiency judgment was available. *

At the end of the year the lender will provide a 1099-C for the amount they have written off.  This will show as income to the homeowner.  The homeowner may or may not be required to pay taxes on this income.  The Mortgage Relief Act of 2007 protects many homeowners that have done a short sale.  Homeowners may qualify for this, or insolvency may be the other option.  (Consult an accountant or attorney for more information) *

A short sale is not a public record and is reported separately on a credit report. The employer will only see late payments and an account that has been settled. This shows that you worked with the lender towards a resolution and typically looks much better to the employer.

The short sale will not show as a “public record”, it will only show on the credit as late payments and “settled for less than full balance” (or something similar).  This shows to the employer that the future or current employee worked with the lender towards a resolution and typically looks much better to the employer.