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Elissa, Home Seller in New Fairfield, CT

I am in the midst of a short sale in NY and need to know the credit score impact . I am not late on any payme

Asked by Elissa, New Fairfield, CT Thu Feb 5, 2009

or if the bank does not take the offer should Iet it go to foreclosure. The bank has asked about a promissary note that I may have to sign so in essence they would get all of their money. HELP

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Hello, In answering your question about FICO scores for a short sale. The average score is impacted about 50 points as opposed to foreclosure which will lower one's FICO score by about 200 points!! The Promissory note is a formality but acording to local Attorneys in this area they have not seen this enforced in Rockland County at this time. May be late but hope this helps. Regards Allan
0 votes Thank Flag Link Wed Aug 4, 2010
Speak with your lender about what exactly will be reported to the credit bureaus. It is the late payments that damage the FICO score, not the solution reached by the distressed homeowner, i.e., whether to short sale the property or let the property go into foreclosure. As you state that you are not late on any payments, their may be no impact on your credit score.
0 votes Thank Flag Link Thu Feb 5, 2009
thank you to all for your input. let me further claify that we have an offer that is in process with the bank and I can't get the full price for the home. It has lost the value. My first and second is around 300K and the offer I got was 255. After commissions it's around 240 or so. It's not my primary residence so I may have to sign the promissory note but I was thinking of asking the bank to put in writing that they will not report this as negative to the credit bureaus. I have had great credit and now that I have high debts and was late with 1 payment back in November my score has dropped . I am very concerned.
0 votes Thank Flag Link Thu Feb 5, 2009
It is a misconception that you must be late on payments in order to sell short. Speak with your lender (loan mitigation department) and see if they require you to be late.

It WILL hurt your credit score and it is not advised unless you are absolutely upside down loan to value and MUST move. If you are handling your payments and can stay where you are, you might look into a refi to lower your interest rates.

If you absolutely have to sell, the short sale is the least of the evils and YES it will hurt your credit. It does not matter whether you are selling in NY or anywhere else.

If this is your primary home, the lender will "forgive" you the money owing, but you will definitely not be able to get any $ out of the sale.
Web Reference: http://GailGladstone.com
0 votes Thank Flag Link Thu Feb 5, 2009
I have done a short sale, but the owner had not payed her mortgage for a long time. It eventually went through but it took 8 months. I know of another short sale that took as long as a regular sale. If you don't owe that much it might be easier to do a short sale than to go into foreclosure if the payments are getting too much for you. If you need any help please call me.
0 votes Thank Flag Link Thu Feb 5, 2009
I agree with Terrence. At this point you are not late on your payments, why would a bank give you a short sale or foreclose on the property? You would need to have a very good reason for the bank to do either: Loss of job, spouse, health issues, and terrible reason. Contact a Realtor who can give you some counseling on the hows and whys. You also could contact an attorney who specializes in foreclosures and short sales. No Bank is willing to lose money so they are asking for a note to repay the difference.
0 votes Thank Flag Link Thu Feb 5, 2009
Letting your home go into foreclosure will be a tremendous impact on your credit score. Did you have an Adjustable Rate Motgage loan in which the rates reset to higher rates? If you haven't been late on payments, why sell? If you must leave, is there a possibility of renting out your home?

Typically, when funds are received from a short sale, the bank may still hold you responsible for the balance. There are just too many questions to ask here on an open forum to be able to help out. There are plenty of options which could be looked at to avoid this.

Terrence Charest, e-Pro
0 votes Thank Flag Link Thu Feb 5, 2009
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