I’m very concerned about what this is going to do to my credit.
A short sale typically shows as a settled debt on your credit report, which is far better than a foreclosure or judgment.
The best news is that once the short sale is completed the mortgage servicer is no longer reporting you as not making payments. So the immediate impact on your credit is you stop having bad marks every month for not making payments.
Here’s how the servicers view this issue:
Credit Bureau Reporting
As described in the Servicing Guide, Part VII, Section 209: Notifying Credit Repositories, the servicer must continue to report a “full-file” status report to the four major credit repositories in accordance with the Fair Credit Reporting Act and credit bureau requirements as provided by the Consumer Data Industry Association (CDIA).
“Full-file” reporting means that the servicer must describe the exact status of each mortgage loan it is servicing as of the last business day of each month. The Payment Rating code must be the code that properly identifies whether the account is current or past due within the activity period being reported prior to completion of the short sale or DIL transaction.
Because CDIA’s Metro 2 format does not provide an Account Status Code allowable value for a short sale, servicers must identify a short sale by reporting a Special Comment Code “AU” the final month of credit bureau reporting in which the status code 13 is reported. The information below is consistent with current “CDIA Mortgage and Home Equity Reporting Guidelines in Response to Current Financial Conditions.”
Upon closing, servicers must report:
Short Sales
Account Status Code – 13 (Paid or closed/zero balance)
Payment Rating – 0, 1, 2, 3, 4, 5, or 6
Special Comment Code – AU (account paid in full for less than the full balance)Current Balance – $0
Amount Past Due – $0
Date Closed – MMDDYYYY
Date of Last Payment – MMDDYYYY
Deed-in-Lieu
Account Status Code – 89 (Deed-in-lieu of foreclosure on a defaulted mortgage)
Payment Rating – 0, 1, 2, 3, 4, 5, or 6
Current Balance – $0
Amount Past Due – $0
Date Closed – MMDDYYYY
Date of Last Payment – MMDDYYYY
Call 713-595-8200 or Email us for free, no obligation information on:
- Credit Counseling
- Broker or Non-Broker Assisted Short Sales
- Deed-in-Lieu of Foreclosure
- Foreclosure Postponement
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