Future Loans with a Successful Short Sale vs. Foreclosure

Homeowner consequences of a successful short sale vs. foreclosure and how it relates to your future loans.

Future Fannie Mae Loan - Primary Residence
Foreclosure-A homeowner who loses a home to Foreclosure is ineligible for a Fannie Mae backed mortgage for a period of 5 years.
Successful Short Sale-A homeowner who successfully negotiates and closes a short sale will be eligible for a Fannie Mae backed mortgage after only 2 years.

Future Fannie Mae Loan - Non Primary
Foreclosure-An Investor who allows a property to go to Foreclosure is ineligible for a Fannie Mae backed investment mortgage for a period of 7 years.
Successful Short Sale-An investor who successfully negotiates and closes a short sale will be eligible for a Fannie Mae backed investment mortgage after only 2 years.

Future Loan with any Mortgage Company
Foreclosure-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.
Successful Short Sale-There is no similar declaration or question regarding a short sale.

Foreclosure vs. Successful Short Sale

We would like to share some tips on how the short sale route is much better than foreclosure. The Canaday Group mortgage counseling department is here for you and will review your options, please call us.

Credit Score
Foreclosure-Did you know that your credit score may be lowered anywhere from 250 to over 300 points? Typically will affect score for over 3 years.
Successful Short Sale- Only late payments on mortgage will show and after sale mortgage will be reported as paid or negotiated. This will lower the score as little as 50 points if all other payments are being made. A short sale's affect can be as brief as 12 to 18 months.

Credit History
Foreclosure- Foreclosure will remain as a public record on a person's credit history for 10 years or more.
Successful Short Sale- Short sale is not reported on a credit history. There is no specific reporting item for 'short sale'. The loan is typically reported 'paid in full, settled'.

Attend our Avoid Foreclosure Seminar on March 11th 7pm at Tijeras Creek Golf Club in Rancho Santa Margarita.

Senate Passes Stimulus Package

This important news comes to us from the California Association of Realtors (C.A.R.):

"On the housing front, the good news is that the legislation resets the conforming loan limit cap at $729,750, up from $625,500. Numerous counties in California experienced a marked decrease in their conforming loan and FHA limits on Jan. 1, and the stimulus bill reinstates 2008 loan limits through Dec. 31, 2009.

The bill also increases the first-time home buyer credit from $7,500 to $8,000, and removes the requirement that the credit be paid back if the buyer stays in the home for at least three years. It also extends the expiration date for the credit from July 1 to Dec. 1, 2009. Homebuyers must have purchased a home after Jan. 1, 2009, and before Dec. 1, 2009, to be eligible for the $8,000 credit.

C.A.R. and NAR (National Association of Realtors) have long advocated for higher conforming loan limits. The conforming loan limit provisions and other housing elements in the stimulus package are a step in the right direction for our industry and all Californians."

Hope everyone is having a lovely President's Day!