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My understanding is that the borrower will take a 200 piont hit to their FICO,it will be on their record for 3 years as paidbut not in full. Is this true?
You can not put a blanket statement about credit and a short sale. There are too many variables to be able to answer this question. If the borrower is not in default, if they have not missed any payments, their credit most likley will not see a huge hit. Also depends on how it is reported to the credit bureaus.
I have sellers whose credit was not affected at all and some who saw a 150 point drop because theystopped making their payements.
We have plenty of sellers who after a short sale their credit scores actually went up. We have those who have such terrible scores because they did not make a mortgage payment for over 2 or 3 years. Going 120 days late drops your credit score to foreclosure levels so the homeowner is going to take a bad hit in being so late.
But we have plenty of homeowners who did not go late on their payments and got a short sale and it only shows on their credit report that they paid their loan off in full. That is a good mark.
Like Jeff says- it all depends!
Yes..but a lot of banks will not accept a short sale until you miss payments so it can hurt the credit if that is the case. I wish more banks would allow a short sale before you are late.
Katerina Gasset said:We have plenty of sellers who after a short sale their credit scores actually went up. We have those who have such terrible scores because they did not make a mortgage payment for over 2 or 3 years. Going 120 days late drops your credit score to foreclosure levels so the homeowner is going to take a bad hit in being so late.
But we have plenty of homeowners who did not go late on their payments and got a short sale and it only shows on their credit report that they paid their loan off in full. That is a good mark.
Like Jeff says- it all depends!
I work with a lot of people who have had a hard time with their short sales and they have to stop paying the mortgage for the banks to work with them.
I think that is something that the banks try to convince us agents of but I have rarely seen this, out of the 41 short sales that I did last year, more than 1/2 were current on their mortgage and most of those were investors and not owner occupied. Alot of it depends on the investor on the loan though.
Paula Evans said:I work with a lot of people who have had a hard time with their short sales and they have to stop paying the mortgage for the banks to work with them.
We have plenty of sellers who after a short sale their credit scores actually went up. We have those who have such terrible scores because they did not make a mortgage payment for over 2 or 3 years. Going 120 days late drops your credit score to foreclosure levels so the homeowner is going to take a bad hit in being so late.
But we have plenty of homeowners who did not go late on their payments and got a short sale and it only shows on their credit report that they paid their loan off in full. That is a good mark.
Like Jeff says- it all depends!
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