I’m working with a seller in Ft Worth, TX who are current on the mortgage but whose house is underwater. The husband accepted a job transfer to Phoenix, AZ and now has the house in Ft Worth that will not sell. They will consider a short sale if it will not hinder their ability to purchase a new home in Phoenix. They are currently leasing in Phoenix. How do I respond to their concerns? How much damage can they expect?

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If the seller can continue to make payments on the Fort Worth house, they should be able to buy almost immediately after the short sale is finished.  Have them consult with a lender to get their advice.

A move for employment in considered a short sale hardship; the damage to their credit rating comes from any missed payments.

...and not from the Short Sale itself?

As long as they stay current through the process, their credit report will read "Paid-not as agreed" or something like that.  The hit on the points is minor, especially compared to the hit they would get if they went delinquent or allowed the property to go into foreclosure. 




Credit scores are only affected by missed payments, not the derogatory credit event in and of itself. Keep in mind, however, having a short sale on you credit history may affect a prospective homeowner's ability to obtain conventional financing for two (2) years following a short sale under current lending guidelines. Finally, you need to ascertain who the investor is on the current mortgage in order to determine whether the homeowner is eligible for a short sale. 

Here is an article I wrote regarding short sales and credit scores that may be of assistance: 


Andrew Coppo

Greater Boston Short Sales, LLC

Andrew, that is not entirely true.  While missed payments cause the majority of damage to credit reports, a short sale DOES have a negative impact on a score most if the time, WITHOUT any late payments.  It is also possible to get short sales removed from credit reports, AND it is also possible to purchase a property right after a short sale with a portfolio lender.

For more info on how to get short sales removed from credit, and also to discuss common credit myths and truths, join this webinar I'm doing next week - https://www4.gotomeeting.com/register/319356135

Agreed, it is not entirely true. The problem is that there is no uniform procedure for reporting short sales to the credit bureaus. Most approval letters state that the short sale will be reported as "accounted settled for less than total amount owed."  Even if reported as a "short sale," the credit bureaus do not have a standard "deduction" for the short sale credit event. Thus, the credit score effect depends upon many factors. My blog article is based on Fair Isaac's (FICO) data regarding the subject which states that there are many factors that contribute to one's credit score following a short sale: 

  • Whether or not the servicer reports the agreement to the short sale to the credit reporting agency; 
  • What information is reported regarding the short sale;
  • Deficiency waiver; and  
  • The overall composition of the consumer’s credit report.

I am interested in seeing what your experts have to say during the webinar. I have yet to see any reliable evidence in contrast to the information provided by FICO regarding the topic. 

We are now retired military and were stationed at Luke Airforce Base in Phoenix, not only once but, twice.  My advise is to NOT buy a house in Phoenix.  Rent.  The housing market there is so volitile.  (Please refer him to a realtor in your network for the stats).  I would be afraid that if they purchased in Phoenix, that they would be underwater again if/should he be transferred again (work). 

If they do decide to purchase.  I would recommend picking one up off the court house steps and fixing it up.  Then, if they need to sell it, they can.  They will need to have a chunk of $$ tp pay for repairs before they move in.


If they do a short sale they will not be able to get a new mortgage
Get the new mortgage sand then do a short sale


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