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credit report scores and short sales/foreclosures
A mortgage broker, who is also an attorney told me the in order of
preferences lenders like to see 1) short sale, 2) foreclosure, and lastly 3)
bankruptcy. But on the other hand the difference really didn't matter
because it will be two years before any lender will look at them no matter
what they do. Another seasoned mortgage broker told me it depends on their
credit profile at the time they apply.
Larry Webb
State Bar of California 229344
Central District California
"A Debt Relief Agency"
Larry@webbklaw. com
Law Offices of Larry Webb
484 Mobil Ste 43
Camarillo Ca 93010
P 805.987.1400
F 805.987.2866
C 805.750.2150
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It is my understanding that regardless of the credit score issue, a
borrower who loses a home in foreclosure is ineligible for a Fannie Mae
backed mortgage for 5 years. I'm not sure how many mortgages are backed
by Fannie.
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I am not sure that you are going to find a definitive answer.
My position (and understanding) - which is the same as a FCRA attorney that
I have spoken to regarding this matter - is that a credit report is a
reflection of actions taken on a consumer's personal liability - not actions
taken on security. This is why a mortgage lender can refuse to report
positive payment history after BK when a debtor does not reaffirm.
If someone's personal liability on a particular debt is being wiped out via
bankruptcy, then the credit report should not say anything except
"discharged in bankruptcy", "included in bankruptcy", or other similar
language - and indicate the balance owed as zero.
If a CRA is reporting a mortgage included in bankruptcy as being
"foreclosed" when the bankruptcy was filed before the foreclosure, that is
erroneous in my opinion.
At that point, it is the bankruptcy discharge that wiped out the debtor's
liability on the mortgage - not the foreclosure - and thus whatever happened
to the collateral after the debtor is no longer personally liability for it
via bankruptcy is irrelevant information that should not be included on a
consumer liability report.
This is true, in my opinion, even for the "public records" section - since
the debtor is not obligated to pay, personally, at the time of foreclosure.
Thus, the foreclosure sale really doesn't have anything to do with them at
that point.
This is just my two cents from having looked into this issue before - and
speaking to a FCRA attorney. Unfortunately, I wasn't able to find anything
definitive. I suppose it would have to be litigated. If anyone has
anything more definitive, I would like to hear about it.
Donny Brand
BBlogo
Brand | Burris
3836 E. Anaheim St.
Long Beach, CA 90804
562.438.7500 T
562.438.8500 F
www.brandburris.com
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They are correct that a deed in lieu or a short sale is better than a foreclosure.
I would suggest that they do a deed in lieu, then file. No need to wait for the short sale. It would accomplish the same thing credit wise and they could file sooner.
Jonathan
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Jonathan D. Leventhal, Esq.
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For those of you (if any) who have expertise with credit scores:
I have a to-be-Chapter 7 client who wants to wait to file their case
until they complete a short sale on their home because they were
told that the short sale would "look better" on their credit report
versus a post-bankruptcy foreclosure, despite the to-be-filed
bankruptcy which will be on the report for 10 years.
I just assumed that the bankruptcy trumped everything else and they
start rebuilding their credit post-discharge.
Does anyone have any definitive affirmation or negation of the above?
*************************
Mark J. Markus
Law Office of Mark J. Markus
11684 Ventura Blvd. PMB #403
Studio City, CA 91604-2652
(818)509-1173 (818)509-1460 (fax)
web: http://www.bklaw.com/
This Firm is a Qualified Federal Debt Relief Agency (see what this
means at
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