Short Sales - Need an update on ramifications

friedmanryan · Joined: 04 Jul 2009 Posts: 3 3.17 Dollars($)

Hi all,

I'm finding tons of links with information on short sales and the effects on one's credit score, but most of them are dated. I'm looking to get an update on this since even as of the start of '09, I know this has changed. With today's marketplace, I would think that lenders are being more lax and are more willing to work with people on short sales knowing they are avoiding the foreclosure process, and thus making it so short sales don't severely affect one's credit.

Can anyone help answer this? Point me in the direction of current answers? I can't talk with anyone at WF about this, because even the short sale department doesn't have answers. I also wouldn't necessarily trust what a bank tells me.

thank you!

jenkin7 · Posted: Fri Jul 10, 2009 12:43 am Post subject:

Hi friedmanryan,

A short sale does affect your credit negatively. But the extent of this effect varies from one person to another. It depends on your particular situation. It can lower your credit by 30-75 points or even more, depending on how many late/missed payments you had prior to the short sale. The lenders may be more willing to accept a short sale than they were before. But the fact that a borrower defaulted on the loan or could not pay it in full, does not change things much in the borrower's favor. It could be a short sale, but the lender still has to accept a short payoff and it does not speak well of a borrower's creditworthiness.

Posted: Fri Jul 10, 2009 8:15 am Post subject:

and how long does "negative effect" last? i've heard/read one year, two years, seven years..

gmakerley · Posted: Sat Jul 11, 2009 5:50 am Post subject:

honestly, the net effect of any derogatory information on a credit report is going to be affected by how all of the other credit information appears. by that, i mean that if you have an assortment of other debt, all of which is being handled in an as-agreed manner, then the effect of a short sale ought to be (at least) partially negated by the prompt payments being reported. over time, the promptness of other credit obligations will have a cumulative effect, increasing your scores despite the negative report.

truly, each case is going to be different. some folk with a mortgage issue may have no other credit difficulties, while others may have a credit report peppered with delinquent payments.

credit scores are derived from one's overall credit experience - the more good, the better the score and the better the chances that a negative report can be overcome.

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