| Issue | Foreclosure | Successful Short Sale |
| Future Fannie Mae Loan Primary Residence (Effective May 21, 2008) |
A homeowner who loses a home to foreclosure in ineligible for a Fannie May backed mortgage for a period of 5 years. | A homeowner who successfully negotiations and closes a short sale will be eligible for a Fannie Mae backed mortgage after only 2 years. |
| Future Fannie Mae Loan Non Primary (Effective May 21, 2008) |
An investor who allows a property to go to foreclosure is ineligible for a Fannie Mae backed investment mortgage for a period of 7 years. | An investor who successfully negotiations a short sale will be eligible for a Fannie Mae backed investment mortgage after only 2 years. |
| Future Loan with any Mortgage Company | On any future 1003 application, a prospective borrower will have to answer YES to question C in section VIII of the standard 1003 | There is no similar declaration or question regarding a short sale. |
| Credit Score | Score may be lowered anywhere from 250 to 300 points. Typically, this will affect a score for more than 3 years. | Only late payments on a mortgage will show and an after sale mortgage will be reported as paid or negotiation. This will lower the score 50 points if all other payments are being made. A short sale’s effect can be as brief as 12 to 18 months. |
| Credit History | Foreclosure will remain as public record on a person’s credit history for at least 10 years. | A short sale is not reported on credit history. There is no specific reporting item for a “short sale.” The loan is typically reported “paid in full/settled.” |
| Security Clearances | Foreclosure is the most challenging issue against a security clearance outside of a conviction of a serious misdemeanor or felony. If a client has a foreclosure and is a police officer, in the military, in the CIA, or any other position that requires a security clearance, the clearance may be revoked. | A short sale on its own does not challenge most security clearances. |
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