What effect does the following options have on ones credit report? Are there any other things a homeowner should be concerned about when considering these methods to avoid foreclosure?
- short sale
- forebearance
- loan modification
- mortgage refinancing
- deed in lieu of foreclosure
- bankruptcy
Thanks for your reply in advance.
a mortgage broker told me one time that once the NOD is filed that nothing will really help them.... "avoiding foreclosure" is a huge myth, when everyone is saying they will save your credit. In effect you are already pretty much ruined anyway, but obviously if it goes the course it will look worse.
[ Edited by Eric5 on Date 10/19/2005 ]
Eric5, thanks for your reply. Even though your reply does not show up on the message board, it can be seen if one tries to edit your post or if they try to reply with quote. Thanks again.
[ Edited by Millionaire1 on Date 10/09/2005 ]
I can just give my opion because I'm a newbie.
For one if there in the foreclosure process they are already 3 months behind in payments and have already damanaged threir credit but can always repair it down the line meaning 12 to 24 months.
All of your topics generally apply to the above because they are already late on their payments your topics are a way out so that they dont have to claim bankruptcy or go through foreclosure.
with a forebearance through a short sale they might be liable for the difference or they will recieve a 1099 for the difference which shouldnt affect their credit at all.
If they file bankruptcy- they have destroyed their credit for the next 7 to 10 years and thats along time.
Using short sale, forebearance, loan modification, mortgage refinancing, deed in lieu, are all ways out and are definately a much better solution than Foreclosure and bankruptcy.
Hopefully this helps 
Anyone else please feel free to jump in if I've miss stated anything.
Michael
so why does my previous post not show, that is weird
If the loan is current, a short sale, a loan modification, and a refinance should have no negative impact upon the homeowner's credit report.
If the homeowner is behind on his payments, but foreclosure has not been initiated, then a short sale, a forebearance, a loan modification, and refinance won't negatively affect his credit report any more than the late payment history already has. Good credit standing can be regained in about two years provided the homeowner does not incur any new credit blemishes
If the homeowner is facing foreclosure, then most likely his credit rating is already destroyed. Bankruptcy will stay on his credit report for ten years. Foreclosure and deed in lieu of foreclosure (if the lender will accept it) stays on the borrower's credit report for seven years.