Reno Real Estate Logic

The angst for Sacramentans wrestling with the decision of Short Sale VS. Foreclosure is becoming more widespread by the day. Sacramento which is one of the cities near the top of the list nationwide for foreclosures has become ground zero for what is happening around the country.

Sacramentans are meeting with professionals who are suppose to be knowledgeable about foreclosures and they still are not sure whether to let their home go to foreclosure or expend the mental energy to attempt a short sale on their property. Here are some very important points for homeowners in Sacramento in considering making their final decision on whether to short sale or foreclose.

Impact On Their Credit Score

Keep in mind that there are too many variables outstanding to make a blanket assertion as to the affect on their credit score because everybody’s circumstances are different. That being said, it is possible for their score to be lowered anywhere from 250 to over 300 points if you let their house just go into foreclosure and can typically affect their score for over 3 years. With a short sale only late payments on the mortgage will show and after the sale the mortgage is typically reported as paid, negotiated, less than full payment, etc. Providing all other payments have been made on time this could potentially lower their score as little as 50 points. This does however depend on other facts like, length of credit history, amount of credit, balance to credit ratios, etc.

Impact On Sacramentans Credit History
A foreclosure will be reported on their credit history for at least 7 years. At the time of this writing there is no reporting for a short sale. The loan is typically reported as paid, negotiated, less than full payment, etc.

Ability To Obtain Future Fanniemae Financing On A Primary Residence In Sacramento

Letting a home go to foreclosure renders you ineligible for another Fanniemae backed mortgage for a period of 5 years. If their are successful closing a short sale you will be eligible for a Fanniemae backed mortgage after 2 years.

Ability To Obtain Future Fanniemae Financing On A Non Primary Residence In Sacramento:

If you are an investor and you let the home go to foreclosure that would render you ineligible for a Fanniemae backed mortgage for a period of 7 years. If you are an investor and you are successful at closing short sale you will be eligible for a Fanniemae backed mortgage after only 2 years.

Ability To Obtain Future Financing With Any Mortgage Company In Sacramento:

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 future rates. There are no similar declarations or question regarding a short sale.

The Affect on Security Clearances:

A Foreclosure on their record can make obtaining a security clearance impossible. It can rate just below a felony conviction or a serious misdemeanor. If you have a foreclosure and are 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.

The Affect On Their Current Employment In Sacramento:

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. Because a short sale is not reported on a credit report there are usually no employment issues.

The Affect On Future Employment In Sacramento:

A lot of employers in Sacramento 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 as a result there are usually no future employment issues.

Deficiency Judgment in Sacramento:
Lenders in Sacramento have the right pursue a deficiency judgment. With a short sale it is possible to negotiate with the lender to not pursue a deficiency judgment against the homeowner.
The author Leon C. Williams is a Financial Strategist in Sacramento California. He specializes in Total Asset Optimization. His Real Estate website is http://sacramentoshortsaleguru.com. Email is leon@williamslandmark.com and phone number is 916-470-5004.