Foreclosure & Short Sale Information
Basic Foreclosure Proceedings:
1. Default: The homeowner misses a payment.
2. Legal Notice: The lender notifies the homeowner that the foreclosure process has begun.
3. Sale or Auction: The lender notifies the homeowner that they have a bank sale or action date.
4. Redemption Period: In most states the homeowner has a limited amount of time to present payment and regain possession of the property.
One way to avoid this process is a Short Sale:
A short sale is when a homeowner owes more on a property than its current market value and the lender has agreed to accept less than the full balance of the loan at closing.
A few facts:
- Foreclosure can lower your credit score 250+ points for a period of 3 years, a short sale typically lowers your credit score less than 100 points for a period of 12-18 months.
- Foreclosures will remain on public record for at least 10 years, a short sale does not appear on public records.
- Foreclosure will make the homeowner ineligible for a Fannie Mae backed mortgage for 5 years, a short sale will make the homeowner ineligible for only 2 years.
