Credit Reports And Short Sales
Those who have undergone a previous short sale need to pay careful attention to their credit report to make sure it was reported accurately by the lender, especially if they want to apply for a new mortgage anytime soon. The short sale may erroneously appear on their credit report as a foreclosure, a blemish that could haunt them much longer and prevent them from obtaining a new mortgage because it’s a red flag to a lender. 
Typically, when lenders report on a short sale, they’ll say, “settled for less than full balance.” That’s a key indicator for a buyer’s new mortgage lender to see because it shows that the previous property was a short sale, not a foreclosure, according to Credit.com. Lenders have the responsibility to report accurately to the credit bureaus.
Credit.com says these credit report codes will also hamper a borrowers’ ability to qualify for a mortgage any time soon: Chapter 5, 8, or 9 – which are often synonymous with a foreclosure.
A short sale borrower is eligible for conventional loan financing 24 months after a short sale at 80 percent loan-to-value or lower. If it’s a foreclosure, however, they may have to wait up to seven years to qualify for a conventional loan, or four years if they can prove it was a one-time economic hardship situation that caused the foreclosure.
Borrowers who have the short sale inaccurately noted in their credit report will need to contact the creditor and likely supply a final settlement statement showing the previous property was a short sale, and a copy of the grant deed transferring the property from them to the buyer.
Read more Credit Reports with FlatFee.com: Credit Report Error
MLS list your home $175: http://www.flatfee.com/
Source: Credit.com 02/06/2014
