Is a short sale like putting (bankruptcy)?

Asked by Jt45505, Panama City Beach, FL Sat Mar 17, 2012

Is a short sale like putting your home into bankruptcy? Is it a "black mark" against your credit?

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James Gordon…, Agent, Hamilton, OH
Sun Mar 18, 2012
Jt a short sale is a black mark on your credit but under current credit scoring it is not as bad as as a bankruptcy. Under current lending cenditions you also qualify to purchase a home again quicker after a short sale than after a bankruptcy. I list homes under lender referral for short salesand have prevented 2 forclosures year so far. One of those forclosures the seller was getting ready to file bankruptcy and he saved that on his credit also. Ohio is a deficiency state and the lender does have the right to look for means to recover the shortage on a forclosure. On a short sale they mark the debt as satisfied and wash off what is owed.

Caution if the short sale is on investment property there may be large tax implications. If you are considering a short sale now is the time to get started because the Bush era tax forgivness program s coming to an end this year andif not extended would cause people to owe income tax on the shortage to the lender.
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Mays Khalaf, Agent, Cincinnati, OH
Sat Mar 17, 2012
Hi,
A short sale occurs when the lender agrees to take less than the full loan payoff of an owner’s property. The homeowner is most likely behind on payments and owing more than the home is worth.

Foreclosure is where the bank takes possession of the property because of non-payment for a long period of time or an unapproved short sale.

Both affect your credit, and if you would like more information on the difference feel free to email me at mays@comey.com and I can send you more detailed information than trulia will allow me to post on here!
0 votes
Tim Moore, Agent, Kitty Hawk, NC
Sat Mar 17, 2012
It sure will be if the bank looses money when it sells and it can be held against you to repay the banks loss. Some states allow deficiency judgments and some do not. Short sale is not as bad as foreclosure, but it sure comes close and your credit takes a big hit either way.
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