Did you know that you can now complete a short sale without having it affect your credit score?! In the past, banks wouldn’t even talk to you about doing a short sale until you were behind on your payments. Now, banks are working with sellers to do short sales without them missing a payment, which means their credit isn’t hurt! This is huge for people who worry about their jobs/security clearance being affected by their credit going down.
I’m currently helping someone sell an investment property and they haven’t missed a single mortgage payment. This loan is with Bank of America and it’s been a smooth, fast and easy process. Some sellers are doing a “strategic default” and don’t care if their credit goes down a few hundred points, but now you can still ditch a non-performing asset and keep your good credit! What’s stopping you now?
My JP Morgan Chase contact also confirmed that they’re doing short sales without the seller being delinquent. He also said that a seller’s credit would not be affected at all if they did a short sale, but were not behind on their payments (you still might want to consult your attorney though). In fact, both Chase and B of A are offering qualified sellers a relocation fee for completing a short sale. In other words, Chase and B of A will pay you to short sell your home! One of my clients thought they’d been foreclosed on by Chase (it was an investment property), but I eventually helped them short sell it and got them $20,000!
However, one negative to this is that even if your credit doesn’t go down, you may not be able to get a mortgage for 2-4 years. Generally, a person who has completed a short sale will have a note on their credit report stating that “the balance accepted was less than the full amount.” Most (if not all) mortgage brokers will not give you a mortgage for 2 years (in some cases more). Even if your FICO score doesn’t go down, you may still be negatively affected.
If you own a home that’s upside down and you want to explore your options, please call me – Denny Oh – 858-243-2092. Once you complete a short sale, the bank cannot come after you for more money. However, this is set to change at the end of the year so you may want to act sooner than later.