The foreclosure and short sale are the devastators of your credit report with seriously impact for many years on it. After the foreclosure and short sale the credit report shows them on it through many years in ahead. The borrower are suffering to get a new mortgage loan to buy a new home for them after the foreclosure and short sale process. There are many ways to get a new home loan after this devastating attack on your credit. In this recession period this experience may happen to anyone, so you have to get ready the answer of that question how you will get home after the foreclosure or short sale.


At fast the government has there to help you in this situation by the government plans for defaulted homeowners. The government may not finance directly but they ask as a guarantor to the lenders to provide loan to such defaulter homeowners to reduce the number of foreclosure and also the government provide assistance to pay back the loan easily on time.

According to the Fair Isaac Company (FICO) the borrower may lose 200-300 points due to foreclosure and short sale process. If the credit scoring is effected by any of these negative events, you can change it by getting some positive activities in the credit report which is like taking a personal loan from any relative or friends or any small lenders and pay it off on time. These positive events will increase the credit score to your desire level to get a new loan for a new home.

The borrower may chose any one of foreclosure, deed-in-lieu, short sale or bankruptcy but you need to conscious about the improvement of your credit standing to get home after that all negative events.

In the recent years the mortgage loan defaults cases are increasing in number. Day by day the number of borrowers is also increasing to sale their home for avoiding foreclosure. In this situation the popularity of short sale is rapidly increasing in the states for the reason of defaulting on mortgage payments. The rate of foreclosure is growing more and more in those days. For this reason people like to sale quickly their home in order to save them from foreclosure touch.


That is why the housing market is buckled with many unsold housings for more than a year. There are lots of sellers of the house but less people to buy them in this current scenario of the housing markets in the states.The short sale is a simple sale process of real estate in which the borrower can sell his house for less amount of money than the balance he owe on his mortgage loan. As the house property fall short of the outstanding of the mortgage loan secured by liens against the house property, so the sale of the house is called mortgage short sale.

It is only happen when the lender is willing to go for short sale and the new buyer is committed. After the short sale the balance of the total loan obligation will be called as deficiency. The lender will have the right to recover the deficiency under the act of deficiency judgment. So before you think about the short sale you have to negotiate with the mortgage lender to inform your opinions with reasons of fall behind in payments and the new buyer’s demands for taking this house.

When the lender is willing to proceed to short sale process for the default mortgage loan clearance with deficiency, the property will be sold less than the actual value of the property.

The short sale is a transaction in which the borrower sale his real property for less than the outstanding mortgage balance due on the property’s mortgage loan. When the lender see selling of the mortgage property at loss is better than pressing the borrower at his financial hardship. With the both parties consent to the short sale the process of selling mortgage property will proceed. Many people default on their mortgage loan and they choose short sale in fear of foreclosure. So the popularity of short sale has increased in this way.

The short sale process approve when the lender agrees to accept the repayments of mortgage at less than full. The borrower will talk to the buyers or real estate agent about the possibility of short sale and get assurance of them on a written application for short sale .The borrower will complete a hardship letter to the lender as a cover letter for the short sale process. In this letter the details of the financial difficulties and explanation of due remaining loan balance with itemize expenses details including closing cost. The letter must satisfy the lender with the written data of the letter to support the claim that the short sale is only solution for this situation. The price of the mortgage house must calculated by the lost mitigation department of the lender and after that the lender will prepare the short sale purchase agreement with legal description of the property, signatures of the competent parties and clear statement of evacuation by the borrower.

The short sale is the good helpful way to avoid foreclosure, which is time consuming and expensive for the lender and a black spot on the credit report through out the 7 years of the borrower . If the short sale brings a deficiency judgment for the borrower as per the state law, the borrower has to pursue the rule.

If the owner of the property sells the property in less than the amount that he owes to the lender, then it will be called Short sale. If the owner can pay off the due amount to the lender then the owner’s credit will not be affected much but if the owner seller for a short sale to avoid foreclosure then his credit will be affected.

It is better to say that short sale will certainly affect your credit score but not as much as foreclosure. Your credit score will be dropped by 100 to 150 points if you go for a short sale but if you face foreclosure then your credit score will be dropped by 250 to 300 points and you may not be able to get approved for home loans for 7 to 10 years. But in case of short sale, if you improve your credit score then you may be able to get approve for a mortgage loan in one and half years.

You cannot go for short sale to avoid foreclosure without the permission of the lender but the good thing of the short sale is that you need not pay the difference between the amount you owe to the lender and the sale proceeds. But this amount will be considered as your income and you are required to pay tax on that amount.

There are other options too to avoid foreclosure and even after short sale if you start making payments to all your bills on time then you can improve your credit within a very short period of time.