Credit–Foreclosure or Short Sale; You decide : Texas Short Sale

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Credit–Foreclosure or Short Sale; You decide

admin | Oct 23, 2008 | Comments 27

If you are lucky enough to sell your property through a short sale in this market, what next?

First CONGRATS!!! By being proactive you have solved your foreclosure problem. Now the question, what is the bank going to do about the deficiency (difference of what is owed as to what it sold for).

1. Your credit will be “bruised” due to the fact there are late payments on the account, but a foreclosure will not be reported which can be much worse. If you were to go through the foreclosure process a repossession would also be reported to your credit report. This can potentially extend the possibility to finance another home for a minimum of 2 years.

2. If an experienced Short Sale Specialist negotiated the sale well, your credit report should read one of two ways:

Account settled for less than full balance or

Account satisfied

Account satisfied will imply to future creditors the account was paid in full. This of course is the better of the two. Account settled implies the balance was settled out and not paid in full. Through these times mortgage lenders will realize there was a short sale or foreclosure. It is at this point a reliable credit repair company can help minimize your time to re-establish your credit. See my helpful links page at www.texas-short-sale.com for a very trustworthy company. More about credit repair companies in another post.

3. The biggest “SURPRISE” through this process is the possibility of a deficiency judgment. The lender has the option to sue for the deficient amount, and if they win a court judgment it is reported to your credit report. This is the worst thing for your credit. It is hard to remove and almost impossible for a lender to extend credit. SOOOO A good short sale negotiator will create a “hold harmless” contract between the lender and borrower to forgive the net deficiency. If the property goes through the foreclosure process, there is a better chance the lender will hold the borrower liable and sue for the deficiency.

4. Beware some lenders may negotiate the borrower pay a promissory note for the deficient amount over an extended period of time. Consider all options here, as each situation may differ, and make the best business decision to sell the property, move on, and re-establish your credit. It may be a good option in the long run.

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Credit–Foreclosure or Short Sale; You decide

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