C.A.R. (California Association of Realtors) has launched a website resource for short sales at Short Sales California.
“With fewer than three of five short sales closing in California, C.A.R. (California Association of Realtors) is well aware of the complexity and difficulty of navigating lenders’ and servicers’ short-sale procedures. To assist both REALTORS® and consumers, C.A.R. will launch a website specifically focused on short sales. Visitors will find information ranging from short sale news, foreclosure timelines, and red flags to watch for, to legal Q&As, a short-sale glossary, and much more.”
To Short Sale or Not to Short Sale – There have been numerous articles recently about advantages and disadvantages of seller’s completing a short-sale rather than foreclosure. Assuming that the lender would allow a short-sale, ultimately the decision is up to the homeowner whether to proceed with this course of action. Home owners should seek proper legal and tax advice from those professionals. That being said, much of what one reads indicates that there is little or no impact on FICO scores between Short-sale and Foreclosure, so why bother. Here is why – FICO is NOT the only factor, it is ONLY a factor. Things to keep in mind:
• It may only be 2-3 years after a short-sale before one can again qualify for a home loan but possibly 7 years after a foreclosure. It should be noted that many lending institutions will not lend, regardless of credit score, with a foreclosure within 4-7 years.
• Allowing property to go to foreclosure absolutely requires missing payments or stop paying the loan. Lenders do not file a notice of default on current borrowers. So prior to a foreclosure there needs to be some serious delinquencies on a mortgage – something that takes many years to recover from on credit. Contrary to popular believe there is no prerequisite that a loan be delinquent in order to obtain a short sale–just eminent repayment concerns.
• Current standard loan applications ask if you have EVER had a foreclosure so not only during the 7 years that it is on your credit report, but virtually for life a foreclosure will haunt. So if you had a foreclosure, 15 years from now, you would have to say “yes” to that question, or risk a claim for loan fraud. Not the case with a short-sale.
• Even if there’s minimal difference in score impact between moderate and severe delinquencies, there may be significant difference in time required for the score to fully recover.
