How Will A Short Sale Affect My Credit?

A short sale will negatively affect your credit, but not nearly as much as a foreclosure or deed-in-lieu ~ read this entire article for details on each alternative.

A short sale simply means that the amount of the mortgage balance owed is greater than the current market value of your home. Homeowners who are in financial difficulties and facing foreclosure often opt for a short sale in order to escape the foreclosure process. This is precisely the situation now across the United States where the sub prime adjustable rate mortgage mess has caused mass foreclosures and significantly reduced the value of real estate.

A short sale takes place when the lender agrees to accept less than the amount you owe him on your mortgage because you don’t have enough equity to sell the home and pay all the costs of the sale. And make no mistake, the lender must agree or you’re out of luck.

the effect on your credit report

You will suffer much more damage to your credit report with a foreclosure than you will with a short sale. It will also take considerably longer to restore your credit rating once your financial difficulties are resolved. In general, here’s what happens:

For a Foreclosure or Deed-In-Lieu of Foreclosure

- Expect about the same things to take place. Quite often this means a loss of between 200-280 points on your FICO score. A pre-foreclosure FICO of 675 could drop to as low as 395, essentially eliminating you from future credit approvals. It may be as long as three years before you can qualify for another home loan.

For a Short Sale

- Expect to suffer some credit score damage, but nowhere near as much. Loss of FICO points will be around 75-125 and your report will show it listed as a ‘pre-foreclosure in redemption’ which is far less negative. You will most probably be able to secure a new home loan in about a year and a half.

In any case, it is a good idea to consult with a lawyer, tax accountant (CPA) or a good real estate agent who is experienced with short sales. These professional may charge you a bit for their services, but failing to have the right counsel could end up costing you a sizable bundle. So don’t consider going it alone. Get the help you need.

Know Where You’re At

NOTICE: Don’t get your credit score from anywhere else except They have real scores here, not the fako crap that many sites give you. These are the real deal.

See How Lenders See Your FICO Score

You Need An Experienced Short Sale Agent!

From my blog here I’ve developed an extensive network of real estate agents that have short sale experience. If you’d like a referral, fill out the form below and I’ll have someone available in your area to help with your short sale ASAP.

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  • girlndebt

    Hey DK.

    I stopped paying my mortgage in June and closed on my short sale in October. I walked away from the closing table with nothing but happy the house didn’t go thru foreclosure.

    My credit report due to that short sale only reports the few lates and “settled”.

  • SavingDiva

    I’ve heard about short sales, but I was really unsure about what it was…thanks for the informative post!

  • Kristin

    My husband and i went through a short sale in october of 07 we stopped paying the mortgage in june of 07. our credit report reads 5 late payments on mortgage and states ” paid in full for amount less then owed” thinking it was a smart move, we paid off my husbands debt and so far it hasnt changed our credit score at all.

  • Charles

    On a pre-foreclosure sale I paid all of the back payments and did a payment plan with the mortgage company. The foreclosure never took place how can I get this off my credit report. Everthing else is paid as agreed. Actually what I am asking is what can I do to get the pre-foreclosure sale off my credit report.


  • Randall

    I just want to say that your web site has given me the answers I have been searching for all over the web. 30 minutes on your web site has totally changed the direction I was heading regarding my short sales efforts.

    I just wanted to say thank you for the information. I will sleep better tonight knowing a bit more about where i am heading.

    Thank you,

  • Nina

    We are still current on our mortgage payment but considering a short sale in the next few months. Our loan mod application was approved but lender increased our monthly payment to what we are currently paying that we cannot afford. We are thinking to do a short sale instead but after reading your posts, it seems not so easy as we thought but a better option than foreclosure. We are now confused if we should opt to going back to renting or buying a home on short sale which almost makes us pay the same monthly dues. Also how do leasing companies, apartments deal with a situation like ours? Haven’t missed a payment but about to sell the property, can we still find a place to rent because our credit history will not show a delinquency yet? I hope someone can give light to this.Thanks

  • girlndebt


    We did just that. We went and did an apartment application while our house was listed and our credit was still good. Even when we started missing payments, the lender did not report it right away. Once you wait and they report it, it is a little harder to get a place but not impossible. You may need to put more of a deposit down, etc and some utility companies will make you put bigger deposits down as well.

    Good luck to ya!

  • Brenda

    We just put our house on the market as a short sale. Many people have stopped by to take a look and it seems like it will sell easily. My husband has not been working and we can’t manage the morgage payment any more. There are several questions and I hope you could help me with them.
    1) Since the houses are now up to 50% less than what we owe on it, could we reason with the bank and have them lower our loan amount?
    2) If we do go with the Short Sale, how much time do we have to wait untill we could purchase another home?
    3) How many years will it affect our credit?
    3) Does the bank realy prefer to sell the house for 250,000 less than what we owe than to reason with the person in the home already?

  • Samuel

    Hi I had a question and wanted to see if anyone can help me with this one. I currently own an investment property that is free and clear (no mortgage)…Thanks to grandpa Eddie. I had recently purchased a home of my own and Im having some financial problems and considering a short sale. My main question is if the lender agrees to the short sale, can they take or put a lien on the property i inherited? If so, any suggestions on how i can protect the property?

  • Johnny

    Pay your bills, and sell your house short. You think it is a good idea to stop paying your bills and walk? Hope all your credit is ruined. The economy is is bad shape because idiots just decide they don’t want to pay your bills. Then cry for the govt to help.

  • Bryan Silva

    I am seriously considering a short sale. I have recently lost my job in Massachusetts (the state of my primary residence) and accepted a job in California. My home is not worth what it was 2 years ago when I bought it. I am current on my payments and have been working hard to build my credit score over the past few years. The reoccurring theme I keep reading as I research short sales is that the lender will not even consider it when you are current on your payments. This is surprising to me. Why if I can make payments should I decide not to? I cannot afford to make up the difference of what the house is worth to what is owed, but it seams crazy to me to stop making payments and fuel the fire of this bad economy. I have been thinking about renting the property, but my current mortgage is far higher than what I can charge in rent so I would be stretched too thin financially to deal with the unknown, such as a renter damaging the property, or the roof needing repaired. I dont know what is the best thing for me to do. Now I dont think I will be buying a home where I accepted the job because the prices are WAY to high for me out here, but my biggest concern is damaging my credit.

  • Bryan Silva

    Also what impact did The Mortgage Forgiveness Debt Relief Act of 2007 have on protecting those of us considering short sales?

  • Holly

    Maybe those suffering from the crash in the market are not the ones to blame. Many people should not have taken or been given these jumbo loans, they did not qualify, but thought if they did not buy now they would be out of luck. Turns out that the luck ran out anyhow. With that said, ecconomy is bad and people are working their butts off to pay for homes that may not ever be valued at what they owe. A negative mean attitude does not help (I am saying that to an earlier post). With that said, every loan company is different, but commonly,you have to talk to loss mitigation or you will get the run-a-round. In some cases you do not have to be late to short sale, you just hsve to provide proof of you situation. Remember too, that currently if you so sell your house for under what it is worth, you will not have to claim the forgiveness as income on your taxes, which makes it more workable (part of the economic stimulus). As this site says it will hurt you credit, but not as bad as a foreclosure.

  • bob in Pennsylviana

    Hi I’m in a very difficult problem I’m now going through a foreclosure. my wife and i are getting a divorce she will not sign off the house nor work with me on a short sale. We only bought the house 2 yrs ago been separated one yr. I lived in the house till i was not able to make the payments any more because my wife was granted alimony. I just now got the alimony reduced to where i could make the payments but I’m 7 months behind the bank wants all that is behind to come current i can not afford that. So i decided to go with a short sale but she does not because she wants to hurt my credit. She is living with her grandmother till she can inherit the house she don’t care about her credit but i care about mine. so if anyone has anything to say or give me an answer thank you

  • Bruno

    Will the “pre-foreclosure in redemption” in the credit report/score report be there forever or just only a few years?

    I’m asking this because so far my credit was great and would not like to have those remarks on my credit.


  • Sam

    I’ve made every mortgage payment faithfully for the entirety of the loan…three years and five months. Lenders were giving away loans to unqualified people back then, but I’m not included in that lot. Now, I’m being moved by the military, and I need to sell my house. But DUE TO FORECLOSURES, the assessed value of my house is down. At the time of the sale, I will lose nearly $23,000. Simply put, I am paying for the bad decisions that lenders made. I have to get a LOAN to SELL my house. Thanks a bunch, mortgage companies! You’re the best!

  • Juan

    Definitely loooking into a short sell. But looks like the lender will need documents as to why you are short selling or cannot afford payments. So, what stops the lender from taking all your assests to cover some of the loss on the mortgage? Can a lender force you to take all your savings, stocks, etc. to pay as much of the debt possible? And where can I find more info on the tax forgiveness?

  • Maria Cavella

    In Dec 07 the mortgage act of 07 passed that protects those whole lose their homes to a short sale. If you occupied the home as your primary residence you are a candidate. Also the IRS has a new form the Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment) Form 982. This came out in Feb of 08. Take this to your CPA at tax time. Having a good realtor, CPA and talking with a real estate attorney is a good idea to.

  • LeavingFL

    My husbands job is ending in Sept, we have a job offer in another state and must move by that time. We have opted on a short sale because we are unable to sell our house based on the market. We have not missed any payments at all. However by the information I have been reading a short sale will not be considered if we are current, so are we just to not continue to make payments at all? What will the late payment due to my credit along with teh short sale reporting?

    I want to be able to rent a home in the other state we are going to how will that be possible if my credit is ruined?

  • Bryan Silva


    I am in the same situation and hope someone can answer those same questions.

  • Nichols

    I am also considering the short sale process. We purchased in 2006 and now our property has negative equity (aprox. $80K to $100K). Part of the negative equity is that the lenders are pricing the foreclosed properties too low…they are causing a domino effect…more homeowners wanting to short sale!…

    We have always made payments on time and have great credit scores. I am wondering how long will I be able to purchase again with a short sale being on our credit report? I would like to take advantage of the new market prices too. Lenders should be willing to negotiate with the current home seller to lower the loan amount to the new market prices that we are now seeing and write off the difference…. this market is just a big headache :-(

  • cg

    Just because you have negative equity would not be a good reason to short sale your house. I believe that you need to show hardship. There are forms that every lender wants you to fill out. One is a financial worksheet, it must show that you cannot afford to keep your house. Some banks require a hardship letter also. This is obviously not a good time to sell unless your forced to. You can always have your credit fixed after a short sale. There are plenty of services out there cleaning up people’s credit, but there are alot of scammers too, you need to interview them and do your homework. I agree lenders should be willing to negotiate but they are not. That is a big problem with people still trying to buy, there is no one lending money except FHA. The lending guidelines are so strict right now, they just don’t want to lend the money. .

  • Shannon B

    Brian and leavingFL – did you ever get any answers and/or did you make any decisions about this? We are selling our home and will owe due to the market but haven’t fallen behind either. After reading this we will not be doing a short sale hopefully, and just taking out a private loan or putting it in our credit cards. I am unsure of how to approach the banks come closing time when they ant $$

  • cg

    Why would you put a loan on credit cards? The bank should do a private note for you. Credit Card interest has skyrocketed, not only that but they have decided they can charge anything they want even if you are making your payments on time. That’s another thing that should be looked into for predatory lending, taking advantage of the consumer.

    Who is your lender — there are a few out there that are easy. Countrywide is NOT one of them. Do you have a 1st and 2nd or just one mortgage. I would always try to short sale, as I said you can fix your credit later. How long will it take you to pay off the amount your house is deficient?
    This isn’t about what kind of person you are or a reflection of you personally, this has to be a business decision.

  • Shannon B

    CG – I appreciate you responding!

    Can we only get a private note if we do a short sale? I’d rather not have it affect my credit, even if I could get it fixed because I’d like to buy a house in the town we’re moving to.

    Our mortgage company is First Franklin – they don’t require us to fall behind in payments or wait 90 days or anything. I just don’t want to do the permanent thing if its going to keep us from owning a home again. We can afford our mortgage easy as it is we just can’t pay a mortgage and a rent for very long once we move in 2 months.

    The house appraised for $146k and we owe $137k so if we got a full price offer we’d only owe a few grand for realtor fees. If its a small amount I’d rather just get a loan or put it on credit and spend 6 months paying it off while owning a new house. If it gets to be $10 – 20k in the hole then we’d have to do a short sale.

    I just don’t understand what happens if we owe when closing time comes. Should I just find the money at closing or should I apply for a short sale when I get a low offer and tell the potential buyer that I have to start the process and wait for the bank to respond?

  • LeavingFL,

    I would advise 2 things before doing a short sale. Do not do it alone. 1st please make sure the realtor you’ve used has closed short sales before, they know how to work these type of loans. 2nd-please do a search on the internet to locate a company that helps in shortsales and can do this for you. We have one in FL and for a small fee (200) they work with the realtor after the offer is made on the house, gather all documentation from you (taxes, paychecks stubbs, hardship letter etc) and THEY work with the mortgage companies. You do not come to the table with any money. Once the lender agrees to the short sale no matter how much is left you don’t pay the rest, and according to the 2007 Fair Housing Act (not sure of exact name) You do not have to pay the difference in taxes. When you secure a buyer, or put on the market, u must disclose a short sale to any buyer as they have to agree to this before submitting a offer on the house. Currently we already have a buyer and are now working with the shortsale company and our mortgage to go the next step. I do not know how much it will effect my credit later as I have had different responses so we shall see. I am in a situation where we must move and we can’t afford 2 payments also.

    I would again look for a company in your area or state that handles short sales and recommend they refer you to a expierenced short sale realtor. This is what we did and it has helped.

  • cg

    Well the trick is to move and establish yourself before you let the house go. If you do a short sale or a deed in lieu you can restore your credit. i agree with LeavingFl, but I don’t care if you use a Fantastic Realtor or The Best Attorney if you are dealing with a lender that does NOT know what they are doing you are playing a waiting game. First Franklin is in bankruptcy, we are actually working on a file now with First Franklin. In order to do a short sale you have to show HARDSHIP. If you are supporting your home easily, then you don’t have hardship. If you move and now you cannot afford two homes. There is your hardship.

  • LeavingFL,

    If you move and now you cannot afford two homes. There is your hardship.

    And this is exactly what you indicate in your hardship letter, as cg stated. We have CountryWide and have heard good and bad things, so we shall see. I had suggested a company that is effective in short sales as they can help answer your questions and help you deal with your lender much better than trying alone.

    Good luck to all on this.

  • Shannon B

    LeavingFL – have you already moved and are currently supporting 2 mortgages? I have about 8 weeks before we leave and I’m wondering if I have to wait until I actually have the hardship or just prove that the hardship is coming very soon once I have to pay for 2 places…

  • LeavingFL,

    We have not left yet,we roughly have about the same time you have left but went ahead and got our hardship package ready (with the shortsale company) that is helping us, We already had it on the market and within less than a month (based on the price) we secured a buyer quickly. Everything was just submitted to the mortgage company..and we wait. However wether it’s finished or not by the time we leave in Sept,we are still going. We had to start now so we can be ready to move it everything is settled by then, if not then the hardship letter explains it enough. “We move, we sell if they don’t accept they can have the house”. I hate that it may get to that, but in the market that is out there now..what choice do I have, as you and others I won’t be able to pay for 2 houses.

    We are renting a house in the new area, will help build back up the credit if it’s dashed.

  • cg

    if you do not short sale..try to do a deed-in-lieu if it gets to the foreclosure point. Make a deal with the attorneys when you receive your demand letter, if it should get to that. The problem with only using a realtor and not an attorney is that the realtor can only take you so far. There is still some negotiation you can do after for yourself. A foreclosure is the worst! A deed in lieu is hard on the credit report but you can restore your credit.

  • Lisa

    What I want is an honest answer as to how bad a short sale is on a credit score. Our score is 580 because we are liquidated with debt. My husband has 3 more classes to finish his degree and it is pushing us to the point that we cannot afford our home. We are commutting and gas prices are killing us. There is a place we are looking at renting and it is only 250 dollars less than what we pay now, but is closer to save on gas. If we stretch and make it through then we probably could, but it will take longer for him to finish school. Also my husband has a stock plan from his previous employer that we don’t have access to until 2010 can they take the money?

  • girlndebt

    There really isn’t a simple answer to how the short sale will effect your credit. There are many things that factor into the equation:how long you go without paying the mortgage before the sale goes through-if the sale goes through and how the lender reports it. Will the short sale look better than a foreclosure…oh yeah but you may have other options. Have you contacted your lender and told them about your hardships? If you have and they were no help-take a different approach like”I am a foreclosure waiting to happen-are you sure there is nothing you can do for us?”. They may lower your payment even more than $250 a month. It is worth a shot.

    I only say this from my own personal experience. Last year we were going through a similar situation. At the time, lenders were not working with anyone and could care less about hardships. We ended up selling our house through a short sale last October. Our lender reported the lates and my credit report shows “settled”. My credit score did not drop too much BUT what ended up happening was my other creditors seen the activity and all of a sudden my rates were increased! That caused a whole other issue especially when we were too “liquidated with debt”. Now we got out of the house but facing other financial problems because of all of it. So if you are having trouble with your mortgage and are trying to save your credit you may want to read about the universal default clause. I wish I knew about all this stuff back then.

    Good luck to you.

    FYI some lenders will do a short sale even if you are not behind on your mortgage-depending on you and your situation. I know even back when I was doing mine-the lender was offering loans for the negative amount-some interest-free. That would probably help in a situation where you do not want a negative impact on your credit. Some people including myself did not go that route because of financial hardships but I know it is available.

  • Susan

    Am I reading that any short sale that we come up with will be denied if I can’t show sufficient “hardship”? Who decides what sufficient hardship is?I have seen more useful information on this website than anyplace else so far. Most people posting are or have been through what I am working with now. Also, CG, what exactly is this “demand” letter that you are refering to?

  • LeavingFL

    In this case the lender is the parties that will consider what “Hardship is’. My realtor (who only works with short sale clients) and a real estate attorney advised us to show any and all hardships or reasons why you can not continue to pay and consider a short sale, loss of finances, hospital or dr bills..banktrupcty, anything that shows you have a hardship.

    My time in moving is coming up and I have had 2 offers and now we play the waiting game of seeing if the Mortgage company will even agree, only time will tell again.

    It’s a sad thing when so many people are going through this type of thing and the only result they feel is panic at the situation….

  • Holly

    We are 4months into the process of a short sale. My husband and I experienced a sudden decrease of income and had to check our options. We are in the hole about 200k since we bought the house in 2005. We are in CA and it may be different in other states, but we have had 3-4 good offers on the house that are just sitting there at the bank not getting any kind of response. Our realtor says it is a “waiting game” and she is sending letters, calling and in other ways actively contacting the loan co. regarding the offers. One offer has been there since February and it is now June. I don’t even really get excited anymore when I hear there has been an offer because it is the bank we need to hear from. I wish I would have known about this company mentioned above that works with the bank on shortsale after the offer is in. I have not heard of anything like that in CA. Anyhow, we did have to get behind on our payment to get the banks attention to do the short sale, they would not even talk to us otherwise. We got a Notice of Default last month and if we will definitely deed in lou if the short sale does not go through. What a terrible thing so many are going through and it is so stressful for families. We are fighting and arguing over the stupidist things, and when we sit down to talk it usually comes back to this distressed sale we are doing, our credit that we worked so hard to uphold and our home that we payed massive amounts of money into over a 3 year period. I pray that we can make it through, and you all too. Also get help if the whole thing is effecting your life, happiness and marriage. Remember you are definitely not alone!

  • Don Lamerdin

    I am in total disbelief that we could be in this situation. After reading the other comments on this page, I realize, that I am not the only one in the world, that soaks my bed every night in anxiety-ridden sweat! I have a similar situation to all the previous people on this same site, and up to this point, have been in a horrible mental state, because of the side-effects, from this crisis. I have had my own business for many years, and it spiraled down to the point where I only have a few dollars coming in each month. My wife works full time, and can only come home on the weekends, because of the gas. I am doing the best I can to keep the hardship from my affecting my kids…but they are living this with us, and can see whats up! Anyone who says this is self-inflicted….well, I’ll reserve comment! Thanks to everyone else on this site who is stepping forward and telling your story. Maybe it will keep all the rest of us, who haven’t thought of suicide, from doing so, and get the Correct help we need to keep going ! Thank you Debt Kid..for all you have done! You have more information, than I could ever find…at double your age!

  • LeavingFL

    Don, I hope you were kidding with feeling like committing sucide, if so I advise you to seek help on dealing with the stress, and you as well Holly. We did and it helped. I don’t get excited either about offers because of the time frame after, we have had “offers” and only to pull out when they realize how long it takes. However I have no choice in the matter so I trudge on. I do get frustrated at times…

    Wonder if we can keep this as a support place?? LOL.

    I continue to wish EVERYONE luck and for anyone who has had success at the final end..feel free to share..we who are on the front end would
    love to hear your thoughts..and the outcomes.

  • http://none Nadia

    Hey debtkid, I want to do a shortsale of my house.
    i need to find an experienced person to help me with that.
    I bought my house last year cannot afford it any longer since I lost my job,
    Can you help me with good references or advice?

    thank you!

  • Megan S

    I moved 4 years ago to another state and have been trying to sell my previous house without any luck. I am now considering a short sale with a company called HomeAssure. Has anyone done business with them or have any comments.

  • Nichols

    To: Megan S
    I found a “rip off” complaint about HomeAssure:

  • Don Lamerdin

    Hello again from “East of Stockton California dream homes”
    To Leaving FL….I’m embarrassed to say no, I wasn’t kidding when the stress gives me thoughts of suicide…I have been in counceling throughout all this (over a year now) Like DK….I can no longer affort it…..duuh me….But the overwhelming urge to avoid those thoughts, are … children….I have spent years trying to be the “Mr Ward Cleaver” to them, (yeah right …I was a hippie in San Fran in the 60′s….;):( Anyhow…..this home out here, with its lake, and barn, and ranch house, which I have completly re-built ….(using my credit cards of course ) …and of course fully expecting to pay eem all off with the 2006 mtge price surge….all set on 11 acres…was our dream, after working for 30 years to get it. We have been here 8 years now, and paid 320K for it back then. In June 06 the neighbors sold for 1 million….so I figured we were all set. Little did I know what was coming over the hill. It has not been appraised yet but I heard through the grapevine that its value of 900K last year is now down in the range of 500K ! Sounds good …eh….not after they subtract the 850K I owe for business loans & credit cds !Just like all the rest of you guys-n-gals, we got hit with the San Andreas Bank fal…er..ah…should I say Default line….or lack there-of ! Now I know what it is like to be on the National Geographic film crew climbing Mt Everest…( or Rainer…for DK) …and looking out at everything soooo beautiful….and then….fall suddenly into a crevase! Yikes….true story…my brother was one of the rangers who found his best friend in one perished, in Yosemite. Anyway…..thats kind of the feeling right now…not to much of some useful info this time…but just wondering if anyone of you all out there……
    ok LeavingFL…..I’m really trying to keep my chin up, and hope everyone else out there doe’s too! I have to paint the palace this weekend, while working on my chapt 7 party…oh and my kids graduation….with the relatives (with $$) over here…and keep a smiley face on. All u have inspired my to do this ….and I thank everyone of you …+/- comments are all good ! But most of all to the Kid….who with out….nobody would have had the ba..s to have lit the fuse to the rocket ride we all want to go on…
    Thanks for my 1 cent more

  • LeavingFL

    Don…I think that you posting how you feel is helpful and I apologize if I offended you by my suggestions…I do understand the stress and that it can cause. Believe me….as you can tell. You are not alone at all.

    We did the refiance on the ARM rates that sounded so good a few years ago and did some upgrades to hour home and figured all would work. 2 years ago I could of pockedt 30k on my house if I sold it (bought in 2003 @150) and 2 years ago worth 280. Now we are lucky if it’s worth 200 etc…But I stil owe 240 because of refiancing home lone and equity lone into each other….etc..etc.etc.

    So..heres a rope..and hang on while we all swing from it, together.
    I promise I am not this freaking postive all the time..:) There are days I screaming into my freaking pillow.

  • Don Lamerdin more thing ……how come none-a – u ….with all we all have been through…..could think of the fact….that
    today is FRIDAY THE 13TH
    Jest kiddin….good day for shortsailing……away

  • Don Lamerdin

    Thanks LeavingFL..
    I know…the momentary smile must be from the Benydryl on ice, cause it is 108 here today…I understand where yer coming from…thats what I did….2 Eq lines , and a dozen cards….duuuh me….but the thing is……my pillow doesn’t muffle sound anymore, cause I have sweated it flat… hmmmm maybe I’ll just go kick a banker or 2 =)
    Bye for now

  • JennMS

    so i read thru every comment on this page and havent figured out if i feel more stressed, or more relaxed. i love all of Don’s comments, they kept me laughing…. ok so my situation may not be crazy yet. my husband and i are a very young couple, 25 and 26. we purchased our townhome just before the market crashed… of course! thats my luck, but anyway. purchased for 172k and could maybe get 99 for it now. we owe 158k and in the past 2 years had a suprise baby…we already had 2, baby made 3, and we have more than outgrown this place.

    we are current and even early on our payments but it is a struggle…i wont be finished with school for another year so we have only 1 income at the moment.

    like so many others we got put into a 5 yr arm. stupid huh?? this was our first home and we know nothing. i feel we got taken advantage of totally! our best friends live next door and have a 30 yr mortgage and only pay $100 more than us per month… how did that happen??? we had similar credit scores and they put NO money down. meanwhile we laid down our $14000 life savings! anyway thats besides the point… recently were thinking of doing a short sale because when the arm becomes mature in 2.5 yrs we will be wayyyyy past needing a bigger place and the prices keep dropping. BUT we want to be able to buy a new house in a year or 2 after saving up some money by renting one of hs parents houses for a meesily $600 per month.

    does anyone out there think a shortsale is for us given the circumstances… we could definitly prove hardship even though we are current on payments. OR are there any other ideas we could try?? my family needs a bigger home and we are losing money by the day in this market and on the intrest only arm im in.

    read this and help!!! i know it was a wayyyy long story :)

  • cg

    Absolutely! You are a great candidate for a short sale. Your certainly can prove hardship You have nothing to lose! Who is your lender? The only hitch is getting a buyer that is willing to hang in there for 60-90 days. I would only list your property with someone who is doing shortsales in your area. If you work with agents that know what they are doing it goes alot smoother.

  • JennMS

    we have 138k through Aurora Loan Services and another 20k through Citi mortgage.

  • Mellissa

    I am exactly the same as JennMS! I am also thinking about short sales, though my credit score is like 726..will it hurt me alot since my husband has NO credit..i am the only one that has the credit. I would rather find an agent then to do it myself…any suggestions on who? i live in broward county florida…thanxx

  • girlndebt


    We are neighbors, lol. I live in South Fla too! I can’t recommend anyone because our agent…”the short sale expert” that had an awesome proven track record lacked communication skills and left us to figure it out ourselves. He listed our house, after that-we never did see the guy again. When he was trying to get our business, he told us all about short sales and I took in all the information I could. He listed the house and we did everything else…I mean EVERYTHING! It is amazing what you learn when you are put in these desperate situations. So I guess I can tell you who NOT to use in our area. lol

    I had a very high score too and the mortgage was in my name only. If you stop paying your mortgage to do a short sale, yes your credit will suffer but not as bad as if you get a foreclosure. Where you and I live is ranked one of the highest in foreclosures even doing a short sale is becoming hard to do but it can be done. Just please please please find an agent that knows what they are doing when it comes down to doing a short sale. We had a friend who is a Realtor in Broward County and when we called her to inquire about a short sale-she had no clue about it. Now months later-we seen her ad and she advertises that she is a “short sale specialist”. I guess she took the course and became a SPECIALIST. What a joke. There are some very good agents out there you just gotta find the right one.

    I wish you luck!

    P.S. I have been reading the comments on this post everyday and I can only say how my heart sinks when I read what so many of you are going through. All I can say is…when it is all over-you will have so much relief! We did. My short sale was a success but unfortunately it came too late and we have debt problems because of it. But, we got through the whole house nightmare and if we can get through that-we can get through anything! So can you.

  • JennMS

    hi melissa and girlndebt, i am also in FL, tampa to be exact.

    on monday i am going to call my mortgage companies and see if they can restructure my loan… maybe put us in a 30 yr mortgage and possibly lower the amount we owe, as i have read on some other sites that its possible they may do that for people to save themselves the lost money through forclosure or short sale. if they will do that i will consider renting the townhouse out, but will still lose about 700-1000 dollars a month.

    otherwise i will still be looking on doing a shortsale. i just really dont want to ruin our credit… the whole point is that we want to buy a BIGGER and better home that suits our family. with damaged credit we couldnt do that.
    i will be on here daily, reading all the stories, and will tell you guys what the mortgage company says. :)

  • cg

    Aurora does short sales. So will Citi but you have to definitely prove hardship it sounds like you have a good chance. Hurry and list your house though. You folks cannot get this done without listing your house. For those of you that have one mortgage… you are in a lot better situation.

    Most lenders will NOT do anything unless you are late… sorry to be the one to tell you that. If any of you think that you are going to do this without your credit being dinged, marred or taking some kind of hit then you are kidding yourselves. But it is not the same as foreclosure or bankruptcy, there are a few good companies out there that are tenacious and can actually clean up your credit, after the short sale is done, but again do your homework.

    This has to be a business decision for you and your family. If you purchased or refinanced in the last 4 years then you are in the same situation as the rest of us. (JennMS) If you can afford your home and are looking to upgrade but your value is just not there in the property you have, then yes you should restructure your loan and make that an investment property. But you are definitely not in the same situation as alot of people who can’t afford their homes at all.

    For any of you that are using your charge cards to live off of to keep your homes…bad move. Do not trade CASH for your CREDIT.

    Countrywide now has a program for Modifications it costs $499 to do them, but it has to be a Countrywide loan — they will give Interest Only for Five Years Low Interest Rate. If they are just the servicer of the loan you don’t qualify. You won’t know unless you call your lender and find out if they have anything available. If they don’t, then come back on here and tell us they don’t. Doing NOTHING will not make your situations any better. If you want a loan modification, when you call your bank — tell them you are looking to do a LOAN MODIFICATION…don’t stop until they get you to the right department.

    If you list your property with an agent — DO NOT LIST FOR MORE THAN SIX MONTHS .. do not get locked in with an agent if you do not know if they are good or not. They all try to get you to list for one year. One thing I have learned in all this.. everything is negotiable.

    There are other options out there — but they cost money.

    I also live in Broward — where are you located?

  • Lisa

    Thank you girlndebt for your comments has anyone else fell a victim to the universal default clause. That kind of freaks me out. What if the mortgage company sues us is that common? How hard is it for them to take our pensions away? We cannot get the money until maturity can they take it when we can get it?

    I am worried about ruining my credit. Who would be a good person to talk to about finding out if this is a good option for our situation? The tax preparer, a lawyer, my pastor at church, the church treasurer, listen to the mortgage broker. How high is gas going to go?

  • girlndebt

    Wonderful advice CG! What are the odds of many of us not just posting from the same state but from the same County? That is crazy. I live in NW Broward (Tamarac/Coral Springs area). I think some people here got caught up in the ARM mess but most including me got the shocker from the insurance and taxes that crept up on us! Yes, you budget for those things but you never expect them to triple so fast.

    And the best advice was not to put this debt on your credit cards! That’s what we ended up doing and well, that is why I am “girlndebt”. 1 year ago, I had perfect credit and did not want to ruin it and did what I had to do to make sure everything got paid. I ended up putting most of it on credit cards. Including the home repairs to get the house sold. Once the house was sold, we were left with high debt and the minimums alone were too much. We wanted to do the right thing and get it paid off. The search was on for second jobs, more income-we sold nearly everything and couldn’t make a dent in the debt. Now with the economy the way it is and gas prices soaring, my credit seems to be the last thing on my mind now. For us it is about survival and we learned from all this really. We have consulted with an attorney and are in the process of filing BK. Gosh, just 1 year ago I was one of those people so worried about damaging my credit. It is amazing how things change so quickly!

    Lisa-talk to anyone you can. Some people are going to have their comments and you are going to hear some things you don’t want to. What is important is that you feel comfortable with the decision you make.

  • LeavingFL


    I also live in Tampa, let us know what the mortgage company says.
    For those of you who have already gone through the short sale process…what does one say to the Mortg company when they start calling because you are behind. Our shortsale package just arrived to them and I doubt they have had time to assign it in the Mitigation dept yet. We are almost 2 months behind now. Is it ok to go ahead and tell the person on the phone or wait? I know it’s just the customerservice collection side calling to remind us…so I don’t want to give to much information until I know the right person has my detail.

    Sounds like alot of FL people go caught up in the ARM as well.

  • cg

    THIS IS IMPORTANT! When the lender calls — it is the Debt Collection Department calling. They have NO CLUE what’s going on in Loss Mitigation Dept. The Debt Collection Dept is there to collect money. You need to tell them you are working on doing a short sale and are working with Loss Mitigation Dept. and that you are doing everything in your power to get out of this mess. They will still ask you — Can you make a payment? “No not at this time!”

  • LeavingFL

    Thanks cg this is exactly what I though,they should be calling tomorrow @9:00am like clock work….lol

  • JennMS

    Thanks cg for all the helpful info. once my husband gets in tomorrow hes going to call the mortgage company. yes we can afford the payment… for now, but for how long? last year our total payment was $1300 a month. No one mentioned it would hit $1700 this year. then when the ARM matures in 2.5 years where will it balloon to? as i said my best friend and neighbor has the same townhouse, same credit, etc but has a 30 yr mortgage and her payment is only $100 more than mine! my first step is to see if they will restructure the loan for us, maybe take some of the principal off…but i highly doubt that one. just an idea i got off someone from one of these sites.

  • cg

    You are starting exactly where you need to be… Get the loan restructured. Who is your lender?
    Keep us informed no matter what direction it goes. We are all here to support you.
    Good Luck!

  • Mellissa

    Thanx for all the comments neighbors! I actually called Hope in regards to my mortgage and they did help me a little..meaning..they took all my information and was supposedly sending it to my lender, Option One. I called the loss mitigation department, but never received a call back from them. That’s why I’m looking into the short sale theory. I also asked a friend who is an accountant and he said that when a short sale does go through, whatever amount you owe to the bank turns to be an income that you need to report when you pay taxes the next year. I don’t know if that’s a good thing or a bad thing. My mom is actually trying to do a short sale also with a company. I’m gonna see what happens with her case before I even start the process. If it turns out good though..i will definitely put their names on here for all the south florida peoples!

  • Mellissa

    I’m in Deerfield Beach by the way. I’m not behind on my payments at all right now and really don’t intend to either honestly… I just don’t want to fork out so much for my mortgage ($1400 not including maintenance or ANYTHING…no tax, no insurance ) which rounds up to be like $2000! And i only have a condo! Also..if i do make my home an investment home and try to buy another home…would lenders actually approve me? I’m like JennMS, i want to get a bigger home also, but just not sure how to go about it.

  • cg

    Tell your accountant to keep up with what is going on…..
    Mortgage Forgiveness Debt Relief Act,,id=179414,00.html

    No tax consequence for the next 2 years on homestead property.

  • JennMS

    cg, we have aurora for 138k and citi for another 20k.

  • JennMS

    cg and melissa,

    so here is an update of what i got from my mortgage company Aurora today… remember, i owe them 138k and another 20k to Citi but i havent called them yet.

    talked to a girl at aurora today and gave her the whole run down on my situation, exactly as i said it here to you guys online. i never even mentioned a shortsale, i was going on and on about restructuring my loan. she said i would have to send in all sorts of info to get the restructure approved. things that included a hardship letter, bank statements, taxes, bills, paychecks, etc. i was tol