Short Sales and Your Credit Report.

Currently, a short sale impacts your credit by decreasing it about 140 pts I'm told. A foreclosure up to 400 points. But what has change is how a short sale is being view on your credit report. Lenders are treating a short sale as they threat a foreclosure in your ability to obtain and retain your credit. I have seen them close credit cards and reduce credit limits as well as inflating interest rates.

So why should a homeowner continue to do short sales and not just let their homes go into foreclosure? If the home is your primary residence, and you short sale it, you have no further obligation to the creditor. If you are foreclosed on, the creditor can come back at you for the deficient amount after the creditor disposes the property up to 2 years.

I feel that in the future, with the amount of short sales, foreclosures, and bad credit card dept, in order for lenders to stay in business, the system will undergo an overhaul. But only time will tell.