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How foreclosure, bankruptcy or short sale will effect you

January 5th, 2011 7:15 AM

One of the most common

questions I get lately is

"How foreclosure, bankruptcy or

short sale will effect my credit?"

Here below, short and sweet the answer to your question, as off 01/05/11

HOW DOES IT EFFECT: FORECLOSURE
SHORT SALE

BANKRUPTCY

Current Employment	A foreclosure can be a ground for reassignment or termination	Short sale is not reported only late payments are, therefore usually no challenge to employment	Works the same as foreclosure
Future Employment	Very detrimental item on your credit report and can challenge employment	Same as above	Same as above
Security Clearance	In almost all cases, clearance will be revoked and job terminated	Same as above	Same as above
Deficiency Judgements	There is no negotiation and the bank can pursue a judgment	Deficiency judgement can be negotiated in most cases	Once the bankruptcy is discharged, no additional deficiencies are allowed
Tax consequences	The bank can, and in most case will, issue a 1099C form. Consult your tax preparer	The bank can, and in most case will, issue a 1099C form. Consult your tax preparer	The bank can, and in most case will, issue a 1099C form. Consult your tax preparer
Future loans: Fannie Mae, Freddie Mac and Conventional	For conventional loans, 5 yrs. from completion of foreclosure and 4 yrs. for Deed in Lieu. Fannie Mae & Freddie Mac 7 yrs. Extenuating Circumstances may reduce the time frame to 2 yrs. Interest rate will be affected. Check with your lender. Investors Loan 7 yrs.	If no lates, 1yrs. Investors 2 yrs. With lates: 2 yrs. with 20% down 4 yrs. with 10% down 7 yrs. with less than 10%	Chapter 7 4 yrs. from discharge or dismissal Chapter 13 2yrs. from discharge or 4yrs. from dismissal

F.H.A.

V.A.

Loans

F.H.A. 3 yrs.

V.A. 2 yrs.

F.H.A. If no lates 1 yrs.

With lates 3 yrs.

V.A. 3 yrs.

Chapter 7 -

2 yrs. from discharge or dismissal

Chapter 13 -

12 months after release

Fico Sores Fico scores will go down from 250 points to more than 300 and will stay on your record for 10 yrs. Short Sales are not reported on your credit history, only the lates, therefore your credit will have a way lower impact Fico scores will go down from 250 points to more than 300 and will stay on your record for 10 yrs.

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DISCLAIMER: I am not a CPA or a lawyer, so make sure to consult your professional advisors.

This and all articles in this blog are intended to provide general information only, this is not intended to be a tax or legal advice and you should always consult with your own accountant, attorney and trusted advisors to discuss your specific situation, goals, rights and options.

Posted by Michelangelo Liotine on January 5th, 2011 7:15 AM

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