Desert Rat,

It seems you speak from some personal experience, but the thing to keep in mind is that as of this moment there is no standard practice for a short sale. What may have worked for you, may not work for the next. I am curious when your short sale took place? This is a forum of opinions, not absolutes, from adults, and through discussion we can all benefit.

A short sale is nothing to take lightly either... it can have serious ramifications. Every situation is unique!

Sometime this next week, the federal government is supposed to issue a list of guidelines and standards concerning short sales... though I don't think I should hold my breath!

Julie,

A foreclosure will drop your score roughly 250-300 points... where as a short sale will drop your score for every payment that is late, and they will stay on your record for 12-18 months.
As of right this moment, short sales will not affect your VA eligibility, security clearance, or future employment, though I have heard some agents swear they will. Talk with your VA Office, and see if you can get something in writing.

There are alternatives to selling short-- forbearance, modification, chapter 13, reinstatement, refinancing... I work with distressed sales and loss mitigation, and I would encourage you to speak to a real estate attorney, an accountant, and an agent who specializes in short sales. Get your 'team' to figure out the best path for you.

I wish you the best of luck!

HI Desert Rat,

Sounds like by your user name you have been in the sand box a time or two :o). Anyway, you need to remember that everyone's situation can and will be different depending on what they need. Short Sales can in fact, affect one's credit. As said before, it depends on your lender and what you work out with them. The lender is the only one that will approve such a transaction.

I am happy to hear that you were able to do your short sale without it affecting you, but that may not be the case for everybody. I think you offer some great advice to Julie by telling her or anyone in the miltary to talk to their VA Regional office as all types of assistance and information should be gathered before any decision is made.

I also agree that in any blog, the person wanting the information should research any answer given; however, I don't think that bad mouthing those that do have advice and probably do have some experience is going to help. Most agents on Trulia don't gain a whole lot by telling possible clients a bunch of "bull" as you put it :o). T

hanks for sharing and I wish you lots of luck Desert Rat :o). Keep your head down in the sand box!

Brenda Mullen
Home Team of America

People that don't know the facts about short sales should keep off this blog and quit confusing people with their "Bull" and incorrect info. You are just adding to the confusion! In other words, people that don't know their ass from their elbow keep off. For example: You can still use your VA home Loan after you have a short sale!!! I did it so quit scaring folks into thinking they can't.
A short sale on a VA loan is actually one of the best ways to get out from under your house if you qualify based on loss of income, health issues, divorce, job transfer, etc. You don't take as bad a hit on your credit as a normal person because your loan default amount is paid by the VA.
You can make arrangements with the VA to repay it to have your full VA entitlement restored or just count on only using your remaining entitlement the next time you want to purchase a home. Talk to your nearest VA regional office that handles VA home loans.
Don't be scared or mislead by people on the blogs that don't know their facts but just ramble a bunch of crap!! Talk to the VA Home Loan Dept. about short sales. Good Luck!!!!!!!!!!!!!!!

Julie,

I hope by now you have received the advice you were looking for on your question. As someone who specialized in credit counseling, personal financial management and creditor relations; I can tell you that I've seen these circumstances many times. Except now, short sales are much more acceptable to the lenders than back 5 years ago. Currently we are working with 3 short sales right now and there is alot involved and your Realtor must really have his ducks in a row in order to achieve a successful outcome, but to answer your question directly; short sales DO affect your credit. They DONT however affect it as much as a foreclosure. The debate whether they affect it more or less than Chapter 7 is still undetermined. There are a handful of options left for you possibly, please seek someone that you can trust that has experience.

God Bless,
Josh

Hello Julie,

It's like Vickie says, a short sale does affect your credit, period. The impact doesn't last as long or as severe as a foreclosure but to answer your question, yes. And, if you are in a VA loan it can have some negative ramifications in the future (there is a chance you may not be able to get a VA loan in the future). You have to talk your bank and see what steps they can help you with, such as refinancing, and, I believe you were on here before, maybe take the steps to become a landlord until you get some equity in your home.

If you are short selling, you have likely been more than 30 days late on your mortgage. Yes, it does affect your credit and it's possible that your lender will seek a remainder owed on the mortgage. It's not a pretty scene unfortunately. Credit reporting is sort of like the law, it's black or white so to speak, and situations don't really matter- it's not fair I know. Sorry to be the messenger but why sugar coat it, it is what it is.

Julie,

Some of the factors that decide how your credit is impacted are how far you are behind (if you are), how the lender deals with these sorts of cases, and whether or not the lender seeks a deficiency judgment against you (in a nutshell seeking the rest of what you would have owed them if you paid your loan in full).

If you are working with a Realtor®, I would sit down and talk it through with them. If you are not, I suggest you find one and start talking to them asap so that they can start speaking with the bank on your behalf in order to get your home listed and on the market as soon as possible. Not sure what kind of time line you're on, but short sales can be painstakingly slow (I have one that I made an offer on 3 months ago and the lender still has not gotten back to us yet).

One thing I will note, if you are looking for and choosing a Realtor® to help you with the process, be sure to find one that works hard at marketing your property. Short sales and foreclosures are notoriously under-marketed (few photos, little in the description, no flyers, web presence, etc.). I don't know why this is, but I feel these homes need to be marketed even more heavily in order to get the short sale/impending foreclosure dealt with as quickly and smoothly as possible.

Hope that helps!

Matt Stigliano, Realtor®
210.240.6222
Exit Realty North-San Antonio
http://www.RErockstar.com
"Your all access pass to San Antonio real estate."

Are you working with a realtor? I think that would depend on your lender and the agreement that you have with them regarding your short sale. There are a couple of different ways your lender can handle the remaining amount left on your lien. Talk with your realtor and your lender about those situations.
Good luck!

Brenda Mullen
Home Team of America
210-807-0819
Brenda.mullen@sbcglobal.net

Yes, it does have a negative impact on your credit. it is better than a foreclosure, but if you can get a modification or do something else, do it.