By Steve In this Article, it gives me great pleasure to introduce you to a tremendous resource in the real estate market, my friend Jeff Sipes of Blue Water Credit. For years, Jeff and his talented staff have been helping our clients and others clean up those messes on their credit reports that bar them from getting loans and taking advantage of today’s real estate market.
Recently, Jeff published a Blog touching on a crucial and all too common issue.. short sales being mis-reported as foreclosures. With Jeff’s permission, I am re-printing his Blog for you. If you are facing these problems and need help, contact Jeff at Blue Water Credit, 916-315-9190 or online at http://www.bluewatercredit.com/index.php.
I hope that you find this valuable:
It’s estimated that almost 1.5 million homeowners have gone through a short sale in the last 5 years, yet many of those are reporting incorrectly on their credit reports as foreclosures. The difference between a short sale or a foreclosure reported on a credit report can cost a borrower valuable time, money, and delay their entry back into the housing market.
How prevalent is the problem? Well consider that here in the Sacramento area more than 1 in 3 homes that sold in those 5 years were short sales, the number of former homeowners trying to rebuild their credit is gigantic. In 2012 alone, short sales accounted for 32% of all sales, while foreclosures declined to 11%, according to the California Association of Realtors.
Now, with glowing signs of optimism in the housing market, many former homeowners are rebuilding their finances and looking to purchase a home again. Ready to take advantage of lower prices and historically-low interest rates, they’re running into an unexpected obstacle, even when their financial situation is strong: the short sale misreporting as a foreclosure on their credit report.
What it means to the borrower:
A foreclosure and short sale have the same approximate negative affect on credit score, knocking a defaulter down 80-165 points. However, the real difference is that someone who short sells a home will be eligible to purchase again in 1-3 years depending on the loan program and if there was a clear, documented hardship. With a foreclosure someone will not be eligible for a home loan for 3-7 years depending on the loan program.
So the benefit to short selling a home is profound, but still the lenders commonly misreport the negative event on the credit report, and consumers accept …read more
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