I am reaching out to see if anyone has any experience with short sales. My wife and I recently ran into an owner who is extremely behind on his payments and although the loan is spectacular, there is no equity in the house for a subject to deal so we are leaning towards a short sale with the seller. However, he had a few questions that we weren’t able to really answer so was hoping someone may have some insight. We’ve reached out to a couple of local folks (members of local REIA, realtors, etc) but have not had luck in having respond yet.
His questions are as follows (btw, we are in Ohio):
1) How long does a foreclosure vs short sale stay on one’s credit? When we checked out Trans Union, it mentioned a foreclosure would stay on someone’s credit for 7 years, but not sure if the owner did a short sale, how much longer it would stay on the credit? Also, we have heard a short sale doesn’t ding your credit as much as a foreclosure but was not sure by how much (or if this is true).
2) Ohio appears to be a deficiency state. My understanding is that in a foreclosure, the bank can still come after you for a personal deficiency. In a short sale, we saw that you can put in the short sale agreement that the lender waives its right to the deficiency if they accept the short sale offer. The owner was particularly concerned with this concept of the loan still following him so he wanted to clarify if this is true.
3) After a short sale, is the owner able to buy a home again in a shorter time via Fannie/Freddie loan than if he had a foreclosure on his record? We read somewhere online that he could wait 2 years before getting a Fannie/Freddie loan as opposed to having to wait 5-7 years if a foreclosure is on his record. Again, not sure if this is true and was wondering if someone may have any insight.
4) The owner doesn’t remember the bank in which he got the loan through since it’s been so long but a servicer is involved. Is this an issue in terms of negotiating with the bank on the short sale process?
Thanks in advance if anyone has any insight into the above!