How Do Short Sales Affect Credit Report

My wife and I are separating.  Both our names are on the title of the home, but the mortgage is entirely in her name.  If the bank agrees to the short sale, how long would it be negatively reported on her credit?

Keith

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Hello Keith,

If both of you were on title when the mortgage loan was originated then both of you signed the mortgage which pledges the property as collateral.  The promissory note may have been in her name only.  According to the FCRA the short sale entry could remain seven years, whereas a foreclosure could result in a judgment which – in Florida for example – could remain for ten years and be renewed again for another ten.  The FCRA permits judgments to remain as long as they are collectible.

But that’s probably not what you were getting at.  The question might be: how long will the short sale negatively affect by way of preventing the financing of another mortgage loan?  The answer is that a person can obtain another mortgage loan two years after the successful completion of a short sale.

Thanks for the questions and hope this helps.

Paul