In these times, many homeowners are contemplating how their credit will be affected if they must sell their home as a “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. This applies to owners of a principal residence and investors, as well. In comparison, a homeowner who loses a home to foreclosure is ineligible for a Fannie Mae backed mortgage for a period of 5 years and an investor who allows a property to go into foreclosure will have to wait 7 years for a Fannie Mae backed mortgage.
A foreclosure will remain as a public record on a person’s credit history for 10 years or more, whereas a short sale is not reported on a credit history. There’s no specific reporting item for “short sale”. The loan is typically reported as Paid In Full. 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.