Foreclosure vs Short Sale Chart

IssueForeclosureSuccessful Short Sale
Future Fannie Mae Loan
Primary Residenc
(Effective May 21, 2008)		 A homeowner who loses a home to foreclosure in ineligible for a Fannie Mae backed mortgage for a period of 5 years. A homeowner who successfully negotiates and closes a short sale will be eligible for a Fannie Mae backed mortgage after only 2 years.
Future Fannie Mae Loan
Non Primary
(Effective May 21, 2008)		 An investor who allows a property to go to foreclosure is ineligible for a Fannie Mae backed investment mortgage for a period of 7 years. An investor who successfully negotiates and closes a short sale will be eligible for a Fannie Mae backed mortgage after only 2 year.
Future Loan with any Mortgage Company On any future 1003 application a prospective borrower will have to 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 is no similar declaration for question on the 1003 application regarding a short sale.
Credit Score Score may be lowered anywhere from 250 to more than 300 points. Typically, this will affect a score for more than 3 years. Only late payments on a mortgage will show and an 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 can be as brief as 12 to 18 months.
Credit History Foreclosure will remain as public record on a person's credit history for at least 10 years. A short sale is not reported on credit history. There is no specific reporting item for a "short sale." The loan is typically reported "paid in full, settled."