Has FICO score penalty for short sale increased?

By
Real Estate Broker Owner with Cimpler Real Estate, Inc.

In my post Credit consequences of the Short Sale we came to a joint conclusion that the FICO score penalty for short sale is 150 points and for foreclosure 300 points.  I have just received an email from myFICO stating that there is no difference in the penalty for short sale and foreclosure:

"However, as far as your FICO score in concerned, there is no difference between foreclosures and short sales or deeds-in-lieu of foreclosures."

Is that true? Has it changed in the new FICO algorithm or was it the case all along? Or, possibly, it varies dependent on some other factors?  I would appreciate your comments very much.

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Tags:
short sales
lenders
cimpler
foreclosure
deedinlieu of foreclosure

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Anonymous #9
Anonymous
Anonymous

  

   I had a short sale in Jan 2007 and one in Aug 2007 and eight lates between the two.  I currently (03/08) have 704, 670, and 640.  However, I have other credit with no late payments and credit util under 50% and 15 years credit history. I was mid to upper 700 before short.   

 

 

March 17, 2008 12:21 PM
Rainmaker
41,885
Artur Urbanski
Cimpler Real Estate, Inc.
Thank you for sharing your experience. How many late payments did you have before the sale finalized? Did the lender allow you to apply without missing a payment or you had to miss payments to be approved? Did lender mail you 1099 for the difference at the end of the year?  Please let us know. Thanks again.
March 17, 2008 02:57 PM
Anonymous #11
Anonymous
di

 

   I had 8 lates between the two mortages.  I was atleast two late before I could get anyone from loss mitigation on the phone.  Although, I tried when I initially saw things going south. By the time of closing, I was 4 months.  No, the lender did not allow me to converse before a missed payment and a contract in hand.  Yes, lender did mail me 1099 for the difference at the end of the year.  My acct wrote it off as a loss.  He told me I am allowed 250 loss/gain in a given year and I was under the threshold.

Now, here it is a little less than a year from my short sale and I was approved for 488,000 fha loan with my boyfriend and my mid score is 680.

So keep your head up. Negotiate with the lender to give you a good credit disposition as condition of the short sale deal.  The lender wants to do the deal as bad as you do.   

 

  

March 27, 2008 02:31 PM
Anonymous #12
Anonymous
Anonymous

I am about to do short sale on one investment property as my cash flow is negative about $800+ monthly and the property value went down by 30% or so.  And I just lost my job last week.  I have never been late on monthly paymentsand my FICO score is 800+.  First, I was told to keep up with the payment, which I can do but does the lender agree to do short sale with no late payments?  (I don't want to hurt my score so I would like to continue payments.)  Second, I would reconsider the short sale if it really hurts my score as much as foreclose.  If the score goes down by say 100, I can live with it if it will recover within a couple of years.  Some people asked the same question above but it still doesn't seem clear to me.  Can anyone please help?  Thanks. 

September 19, 2008 06:50 PM
Anonymous #13
Anonymous
Anonymous

It seems everyone has the same question.  Why is no one answering this question?

December 13, 2008 06:17 PM
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Rainmaker
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Artur Urbanski

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