e ic o h C t h ig R e th g in k a M for a Stable Future
The Andries Team!
Prepared Exclusively for: Tyler Koling
Provided by: Chris & Amy Andries Branden Lowder & TammyChris Faecher, Re/Max Palos Verdes Realty (310) 507-3995 TheAndriesTeam@gmail.com 1406 Blossom Lane, Redondo Beach, CA 90278 Amy (310) 346-2986 (310) 343-1404 Amy4Homes@cox.net branden.lowder@yahoo.com www.TheAndriesTeam.com http://www.brandenlowder.com/
Provided by:By: The Andries Team Prepared Branden & Tammy Faecher, Re/Max Palos Verdes Realty Chris &Lowder Amy Andries 1406 Blossom Lane, Redondo Beach, CA 90278 Chris343-1404 (310) 507-3995-TheAndriesTeam@gmail.com (310) Amy (310) 346-2986- Amy4Homes@cox.net branden.lowder@yahoo.com http://www.brandenlowder.com/ www.TheAndriesTeam.com
Short Sale
vs.
Foreclusure
Making the Right Choice for a Stable Future Millions of Americans have lost their homes to foreclosure during the housing market crash. There is also a growing trend of distressed homeowners that have sold their home through a lender-approved short sale for less than the balance owed. Lenders often prefer a short sale to a foreclosure because it saves them money. While lenders may lose less in a short sale than a foreclosure, how does the distressed homeowner fare? There is much discussion in the media about whether a short sale or a foreclosure is a better choice. This report will compare the two scenarios so homeowners can make an educated decision about how to proceed when faced with this challenging situation.
Effects on Your Credit According to FICO, short sales have the same effect on your credit rating as a foreclosure, lowering your score 75 to 160 points. If you have a higher credit rating before entering into a short sale or foreclosure, the drop in score will be more significant, as indicated by the Short Sale vs Foreclosure chart issued by the FICO Banking Analytics Blog. The flaw in FICO’s research is that they are applying theory to an event that is happening to millions of households across the nation. The reality is that, compared to the rating of borrowers who have foreclosure on their reports, those that have chosen short sales consistently experience a lesser impact on their credit scores.
Effects on Current and Future Employment Now more than ever, employers are checking a potential employee’s credit report before hiring. Some even pull credit reports on existing
employees on a recurring basis. Having a foreclosure on your credit report may affect your ability to gain employment and may even affect your ability to keep your current job in “at will” employment states. In “at will” states, an employer can fire an employee for any reason not protected by antidiscrimination laws or US Bankruptcy Code 525, which forbids an employer from discriminating against an employee who has filed for bankruptcy. In these states, an employer can terminate employment based on information found in a credit report. If you are in the military or in another position that requires you to have security clearance, a foreclosure may also have an adverse affect on your employment. If this describes your situation, a short sale or other foreclosure alternative should be considered.
Effects on Ability to Buy a Home in the Future One of the biggest benefits of a short sale over a foreclosure is your ability to obtain a mortgage more quickly after the transaction is completed. For every institution that backs a mortgage loan, the waiting period after a negative credit event is significantly shorter after a short sale, as shown in the Waiting Period chart below. Waiting Period After Short Sale
Waiting Period After Foreclosure
Immediately*
3 Years
Fannie Mae
2 Years*
7 Years
Fannie Mae
4 Years*
7 Years
VA
1 Year*
1 Year*
USDA
3 Years
3 Years
Loan Type
FHA
*certain requirements must be met
© 2011 Distressed Property Institute, LLC All Rights Reserved. The above brokerage assumes no responsibility nor guarantees the accuracy of this information and is not engaged in the practice of law nor gives legal advice. It is strongly recommended that you seek appropriate professional counsel regarding your rights as a homeowner.
Provided by: Andries Chris & Amy Branden Lowder & Tammy Faecher, Re/Max Palos Verdes Realty Chris (310) 507-3995-TheAndriesTeam@gmail.com 1406 Blossom Lane, Redondo Beach, CA 90278 Amy 346-2986- Amy4Homes@cox.net (310) (310) 343-1404 www.TheAndriesTeam.com branden.lowder@yahoo.com http://www.brandenlowder.com/
Most distressed homeowners are experiencing temporary financial reversals, and the flexibility to reenter homeownership when they are ready is seen as a huge advantage of a short sale.
Deficiency Judgment The deficiency judgment is the amount owed to the bank after a short sale or foreclosure. In deficiency judgment states, the borrower may be liable for the amount owed to the lender until it is paid in full. In the event of a short sale, the homeowner has the right to negotiate or have the deficiency judgment completely waived. In a foreclosure, the homeowner does not have the opportunity to negotiate the deficiency, and will always be liable for this debt, often numbering in the 10s of thousands of dollars or more.
Psychological Effects Many distressed homeowners find that short sales give them more control and enable them to stay in their homes while the home is for sale. They can avoid the stigma of foreclosure and be an active participant in the process of working out a deal with the lender. In a foreclosure, the lender orders the homeowners to leave on a certain date. The event is also made public and is often an embarrassment to the homeowners and especially hard on children who don’t fully understand why they have to leave their homes.
Being able to purchase a new home as soon as your financial stability is restored is also a key benefit of short sales. Even if you choose never to own a home again, knowing that you have the opportunity to negotiate the deficiency judgment is also a benefit that should not be overlooked. Give me a call today for more information about short sales and other alternatives to foreclosure. I can help guide you through the process and put you back on the path to financial and emotional stability.
Place Your Confidence in CDPE With the right assistance, the stress of facing foreclosure becomes manageable. CDPE-designated agents have received the knowledge and training necessary to assess all possible foreclosure alternatives and pursue homeowners’ best options. A CDPE-designated agent attends several days of intensive, thorough training on foreclosure avoidance and how to negotiate short sales efficiently and ethically. The highly regarded CDPE logo means you are working with the most informed, up-to-date resource available.
Weighing Your Options Although a short sale and a foreclosure may have similar implications to your credit, it is clear that for most distressed homeowners, a short sale has many benefits that lessen the blow of an already challenging situation. It is also an honorable, cooperative way to work with the bank to lessen its loss while alleviating the burden of paying a mortgage you can no longer afford.
Š 2011 Distressed Property Institute, LLC All Rights Reserved. The above brokerage assumes no responsibility nor guarantees the accuracy of this information and is not engaged in the practice of law nor gives legal advice. It is strongly recommended that you seek appropriate professional counsel regarding your rights as a homeowner.
IMPORTANT GOVERNMENT DISCLOSURE: You may stop doing business with us at any time. You may accept or reject the offer of mortgage assistance we obtain from your lender (or servicer). If you reject the offer, you wil not have to pay us for our services. The above brokerage is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan.