Short Sales And Credit Reports
Can anyone tell me what happens to the sellers credit rating when a short sale happens. Does the lender adversly report the short sale on their credit report? Isnt someone held responsible for the loss?
Mr. Buyout:
Great question. What typically happens is the loan will show up "paid" on their credit report, however there will be a notation that says "settled for less that originally owed" or something to that verbage. It is still better than showing up as a foreclosure.
Best Riches,
Jeff Adam
_________________
"The only place success comes before work
is in the dictionary."[ Edited by JeffreyAdam on Date 08/01/2004 ]
I know of a situation where the lender participated in a HUD short sale where HUD paid the seller(s) $750 for participating in their program and the lender signed a document stating that they WILL NOT be seeking any deficiency from the seller. In spite of this, the lender reported the short sale as a "charge off" with an $842 loss on the seller's credit report. I'm not sure that is ethical practice.
Agreeing NOT to pursue a deficiency is not the same as not to accurately report the transaction to the credit reporting agencies.
Whoever negotiated the short shoud have requested that the account be reported , 'paid as agreed'
But there is no guarantee that they will agree to anything outside their SOP.