National reports reveal that over 80% of the homeowners who try obtaining a loan modification do not qualify or still end up defaulting on their modified loan within 1 year.  The lender then forecloses on the property.  Most homeowners do not realize that there up to 13 other options available to them that will not devastate there credit as badly as a foreclosure.  (I discuss the list with any client experiencing financial difficulty making their house payments)

Most homeowners find the least damaging and most successful option available to them is to short sell their property. 

A Short Sale:
1. Protects Your Credit Score: Your credit score will be significantly impacted with a foreclosure.  A foreclosure will drop your score by over 300 points while a short sale reduces your score by a little over 150 points.

2. Improves Your Eligibility For Another Home Loan: A foreclosed homeowner will not qualify for a home loan for 5 to 7 years (only 2 years with a short sale).

3. Avoids a deficiency judgment: Many Lenders file a deficiency judgment against a foreclosed homeowner 1 to 2 years after the foreclosure occurred.  The former lender can garnish wages and savings accounts to collect the difference between the sales price of the home and the amount of there unpaid loan balance plus incurred late fees and penalties.

4. Improves Your Options When Renting:  Many landlords today are not accepting tenants with a foreclosure on their record.  The pool of other tenants to select from is just too large.

5. Improves Your Employment Prospects: Employers frequently run credit checks on prospective employees. A foreclosure on your record can eliminate new job offers and jeopardize your current employment.

6. Decreases Your Lender's Loss By 10%:  Lenders prefer homeowners to complete a short sale since a foreclosure is 10% more expensive for them than a short sale.