Deficiency Judgment with a Successful Short Sale vs. Foreclosure

Deficiency Judgment is defined as the amount for which the borrow is personally liable on a note and mortgage if the foreclosure sale does not bring enough to cover the debt. The judgment is for the total amount and not for the deficiency, the recovery from the foreclosure sale being deducted from this amount.

Deficiency Judgment
Foreclosure-In 100% of foreclosures (except in those states where there is no deficiency) the bank has the right to pursue a deficiency judgment.
Successful Short Sale-In some successful short sales it is possible to convince the lender to give up the right to pursue a deficiency judgment against the homeowner.

Deficiency Judgment (amount)
Foreclosure-In a foreclosure the home will have to go through a 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 will result in a higher possible deficiency judgment.
Successful Short Sale-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 a REO sale resulting in a lower deficiency.

Credit Tips... part 1

Here are a couple credit tips for you!
1. Payment History - The Most Important Category
Pay your bills on time and don't have a history of late payments, collections, public records, etc. The more incidents of credit transgressions, the more your score will suffer. And if you have recent negative information that will punish your scores more than if they are several years old.

2. Debt
While your installment debt (auto loans and mortgages) are factored into your scores, it's really your credit card debt that's most important. The balances that you carry on your credit cards can affect your scores almost as much as whether or not you make your payments on time.