Short Sale vs. Foreclosure | Offering Short Sale Solutions

Homeowner's Consequence	Foreclosure	Short Sale
Future Conventional Loan - Primary Residence	A homeowner who loses a home to foreclosure is ineligible for a Fannie Mae-backed mortgage for a period of seven years.	A homeowner who successfully negotiates and closes a short sale will be eligible for a Fannie Mae-backed mortgage in as little as two years
Future FHA Loan - Primary Residence	A homeowner who loses a home to foreclosure is ineligible for an FHA loan for a period of three years from completion date.	A homeowner who successfully negotiates and closes a short sale will be eligible for an FHA backed mortgage in as little as three years.
Future VA Loan - Primary Residence	A homeowner who loses a home to foreclosure is ineligible for a VA loan for a period of two years from completion date.	There is no specific information on this yet; assume foreclosure rule of two years.
Future USDA Loan	A homeowner who loses a home to foreclosure is ineligible for a USDA loan for a period of three years from completion date.	There is no specific information on this yet; assume foreclosure rule of three years.
Future Loan with any Mortgage Company - Disclosure Guidelines	On any future 1003 application, a prospective borrower must answer YES to question C in Section VIII of the standard 1003 that asks "Have you had property foreclosed upon or given title or deed in lieu thereof in the last 7 years?" This will affect future rates.	There are no similar declarations or questions regarding a short sale.
Credit Score	Score may be lowered anywhere from 250 to over 300 points. Typically will affect score for over three years.	Only late payments on mortgage will show and after sale, mortgage will be reported as paid or negotiated. This will lower the score as little as 50 points if all other payments are being made. A short sale's effect on a credit score may be as brief as 12 to 18 months.
Credit History	Foreclosure will remain as a public record on a person's credit history for ten years or more.	A Short Sale is not reported on a credit history. There is no specific reporting item for 'Short Sale'. The loan is typically reported 'paid in full, settled'.
Security Clearances	Foreclosure is the most challenging issue against a security clearance outside of a conviction of a serious misdemeanor or felony. If a client has a foreclosure and is a police officer, in the military, in the CIA, Security, or any other position that requires a security clearance, in almost all cases clearance will be revoked and the position will be terminated.	A Short Sale on its own does not challenge most security clearances.
Current Employment	Employers have the right to regularly check the credit of all employees who are in sensitive positions. In many cases, foreclosure is grounds for immediate reassignment or termination	A Short Sale is not reported on a credit report and is therefore not a challenge to employment.
Future Employment	Many employers are requiring credit checks on all job applicants. A foreclosure is one of the most detrimental credit items an applicant can have and in most cases will challenge employment.	A Short Sale is not reported on a credit report and is therefore not a challenge to employment.
Deficiency Judgment	In 100% of foreclosures (except in those states where there is no deficiency) the bank has the right to pursue a Deficiency judgment.	In some successful Short Sales it is possible to convince the lender to give up the right to pursue a Deficiency judgment against the homeowner.