Short Sales offer the homeowner many more benefits than going through a Foreclosure.  In the case of a short sale, the benefits to the homeowner are:

  • Only late payments on the mortgage show on a credit report and after the sale of the home, the mortgage will be reported as paid or negotiated.  This could lower a homeowner’s credit score by as little as 50 points if all other payments have been made.  The affect of a short sale can be as brief as 12 to 18 months.
  • A Short Sale is not reported on a credit history.  There is no specific reporting item for ‘short sale.’  The loan is typically reported as ‘paid in full, settled.’ 
  • A Short Sale on its own does not challenge most security clearances whereas a foreclosure does.
  • A Short Sale is not reported on a credit report and is therefore does not present a challenge to employment.
  • In some successful short sales it is possible to convince the lender to give up the right to pursue a deficiency judgment against the homeowner, (i.e., payment of the shortfall or the difference between what was owed and what the bank received.)
  • Under the Mortgage Forgiveness Debt Relief Act of 2007, if a deficiency is forgiven or cancelled, the home is a principal residence, and it is worth less than $2 million, the tax on the deficiency will be forgiven.  This benefit applies to homes that are the subject of a Short Sale and a Foreclosure.


Click the links below for more details about The Mortgage Forgiveness Debt Relief Act of 2007


  • A homeowner who successfully negotiates and closes a short sale will be eligible for a Fannie Mae backed mortgage after only 2 yrs.
  • An Investor who successfully negotiates and closes a short sale will be eligible for a Fannie Mae backed investment mortgage after only 2 years.

If you feel you are near foreclosure, please contact me, Jon Smith of Iowa Realty.  I can help you decide what your options are and explain what is in your best interest.