Possibly get paid a $3,000 or more relocation incentive

No

Yes

Future Fannie Mae Loan

Primary Residence

(effective May 21, 2008)

A homeowner who loses a home to Foreclosure is ineligible

for a Fannie Mae backed mortgage for a period of 5 years.

A homeowner who successfully negotiates and closes a

short sale will be eligible for a Fannie Mae backed mortgage

after only 4 years and in some cases even sooner.

Future Fannie Mae Loan

Non Primary

(effective May 21, 2008)

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.

An investor who successfully negotiates and closes a short sale

will be eligible for a Fannie Mae backed investment mortgage after

only 4 years.

Future Loan with any Mortgage Company

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 your future rates.

May or may not be reported on future loan applications.

Restrictions on future home

Purchases

Eligible to buy in 5 years with restrictions, or 7 years with no restrictions.

Can purchase immediately under certain circumstances.

Credit Score

Score may be lowered anywhere from 200 - 400 points.

Typically will affect score for 7 years.

Only late payments on mortgage will show and after sale mortgage

will be reported as paid or negotiated. This will lower the score as

little as 50 - 150 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 will remain as a public record on a person’s credit

history for 10 years or more.

Short sale is not reported on a credit history. There is no specific

reporting item for ‘short sale’. The loan is typically reported ‘settled’.

Security Clearance

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 requires a security clearance, in almost all

cases clearance will be revoked and position will be terminated.

A short sale on its own does not challenge most security clearances.

Current Employment

Employers have the right and are actively checking the credit

regularly of all employees who are in sensitive positions.

A foreclosure in many cases is ground for immediate

reassignment or termination.

A short sale is not reported on a credit report and is therefore not a

challenge to employment.

Future Employment

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.

A short sale is not reported on a credit report and is therefore not a

challenge to employment.

Deficiency Judgment

In 100% of foreclosures (except in those states where there

is no deficiency) the bank has the right to pursue a deficiency

judgment.

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)

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 sale in a declining market.

This will result in a higher possible deficiency judgment.

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.