Your First Resonder
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Each Office Independently Owned and Operated
8100 Ashton Ave #103
Manassas,  VA 20109
540-229-4021
Piedmontsells@gmail.com
Lyle Holmes
Realtor
540-229-8937
Lyleholmes3@gmail.com
Stacey Holmes
Realtor
CDPE, CFS
Licensed in the
Commonwealth of Virgini
a
Stace Holmes Realtor Fredericksburg
Credit Consequences with real estate short sale transactions
This question is asked very frequently and has many different variables involved. The first thing to keep in mind is that the moment you go 30+ days behind on your mortgage payment, your bank has the right to report to all of the credit bureaus that you are 30 days behind on your payments. When a late payment is reported to the three major credit bureaus, it does have a direct affect on your credit. After going through a Short Sale or a Foreclosure, most people have multiple 30, 60, and 90+ day late payments reported on their credit report. When the actual Short Sale is completed, most banks will report to your credit report that your account was “paid in full for less than the full amount.” Your credit report may also be marked as “settled.” It is important to keep in mind that each lender has a different way of reporting that a Short Sale was done, but this is the most common language that is seen. If your home were to go to Foreclosure you would most often see the bank report “Foreclosure” on your credit report. It is difficult to gauge how much of a credit scoring affect a Short Sale has vs. a Foreclosure. Credit experts will agree that neither a Short Sale nor a Foreclosure is favorable to your credit or credit score, however, the impact of a Foreclosure is much worse. We strongly advise you to work with a Credit and Credit Scoring Expert for more specifics on this topic, and ways in which to improve your credit after the Short Sale is complete. A Short Sale is possible to do without ever missing a payment; however it depends on the bank and your loan situation. When there are no late payments on your mortgage, your credit score is generally not affected. It is possible to maintain a high credit score by completing a Short Sale without missing payments on your mortgage and other bills. Please be aware though, that your lender will still report that a Short Sale was done so while you may not see your credit score drop if you continue to make payments through the completion of the Short Sale, you’ll still likely have your account marked as “paid in full for less than the full amount” and/or “settled.”

Question: Can the bank sue me or place a judgment against me for the difference between what I owe and what the home sells for?

This is a good question that is best answered by a qualified Real Estate Attorney. What you should know is that Virginia is what most people refer to as a “Judgment Deficiency” state. What this means is that generally speaking if the bank forecloses on your home, they can pursue you for a deficiency judgment. In the final documents from the bank; we want the bank to state something like “the loan is paid and they will not pursue a deficiency judgment”. If the bank will add a statement pertaining to this.
It is also important to know that most Home Equity Lines of Credit (HELOC) are not just secured to your home, they are also personally “backed” by you. What this means is that even though your HELOC bank may agree to do a Short Sale or Foreclose on your home, they still may attempt to collect on your account - even after the Short Sale or Foreclosure is complete.

Question: Are there any credit consequences to a Short Sale?

how the real estate short sales effect your credit score
The Piedmont Team offers Real Estate services in the following areas:
Culpeper, Fauquier, Fairfax, Fredericksburg, Manassas, Orange,
Prince William, Rappahannock, Spotsylvania and Stafford.
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Credit Consequences - Short Sale: