Frequently, clients have asked me in the past whether a short sale was as detrimental to their credit history as a bankruptcy. I have always told them that it was. A foreclosure is worse. Recently, I decided to prove what I knew by intuition. Here are the Freddie Mac Guidelines for "Caution Mortgages", which was produced in April 2009. Freddie Mac and its sister Fannie Mae control 95% of the mortgage market. Freddie says a borrower must have re-established his/her credit history for 48 months after a short sale, deed-in-lieu or Chapter 7 bankruptcy. A borrower must have a rehabilitated credit history for 60 months following a foreclosure. Finally, for those clients who seek to resolve their debts through a non-bankruptcy process, Freddie still requires the borrower to have a clean credit history for 48 months. Basically a Chapter 7 bankruptcy may be the way to go.
Martin Conway
This blog is not intended to render legal services to the reader. Consult with a lawyer concerning the specific application of the law to your unique circumstance.
This blog is not intended to render legal services to the reader. Consult with a lawyer concerning the specific application of the law to your unique circumstance.
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