Benefits of Short Sales

Your Credit Score

Short Sale

Only late payment on mortgage will show. This could lower the score as little as 50 points depending on duration of the delinquency of the mortgage. A short sale’s affect can be as brief as 12 to 18 months.


Scores may be lowered up to 400 points and the foreclosure will show on credit report for up to 10 years.

Your Credit History

Short Sale

The loan is typically reported ‘settled for less than full amount.’ FHA/HUD will report “short sale” to the credit bureaus.


Foreclosures stay on credit record for up to 10 years.


Short Sale

In most successful short sales, the lender gives up the right to pursue a deficiency judgment against the homeowner. 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 or no deficiency at all if waived.


In deficiency states like Missouri and Illinois, the bank has the right to pursue a deficiency judgment in 100% of foreclosures. 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 may result in a higher deficiency judgment.

Buying Another Home

Short Sale

At the time of this document, there is no similar declaration or question regarding a short sale.


On any future mortgage applications, a borrower will have to answer YES to question C in section VIII of the standard application that asks “Have you had a property foreclosed upon or given title or deed in lieu thereof in the last 7 years?” This will affect future interest rates.

Buying Another Home with a Government Sponsored Enterprise Loan

Short Sale

A homeowner who successfully closes a short sale may be eligible for a Fannie Mae or Freddie Mac backed mortgage after only 2 years or less in some cases, depending on the duration of delinquency and other factors.


A homeowner who loses a home to foreclosure is ineligible for a Fannie Mae backed mortgage for a minimum of 7 years.

Buying Another Home with an FHA Loan

Short Sale

Homeowners who complete a short sale may apply for an FHA loan in 1-2 years if they can show the default was due to circumstances beyond their control and had satisfactory credit before the event. Some may be able to apply for an FHA loan sooner if they had a short duration of delinquency at the time of closing.


Once foreclosure has happened it can take between 7 and 10 years to secure an FHA loan.

Job Security

Short Sale

The loan is typically reported ‘settled for less than full amount owed.’ FHA/HUD will report “short sale” to the credit bureaus.


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.

Your Next Job

Short Sale

The loan is typically reported ‘settled for less than full amount owed.’ FHA/HUD will report “short sale” to the credit bureaus.


Many employers require credit checks on job applicants. A foreclosure is one of the most detrimental credit items an applicant can have and in most cases may challenge employment.

Security Clearance

Short Sale

A short sale does not challenge most security clearances


Foreclosure is the most challenging issue against a security clearance outside of a conviction of a serious crime. If a client has a foreclosure and has a job/position that requires a security clearance, it may be revoked and the position may be terminated.

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