Short Sale Fumble By The Credit Agencies
Recently, it was discovered that credit agencies are improperly recording short sales. Credit agencies
are admitting that they do not have a code for short sales. Ultimately, short sales are being reported
the same way as a foreclosure is in the eyes of a future lender. This is immensely unfair to those
homeowners who have taken the time and effort to mitigate their losses, but will be looked at the
same as someone who sat back and did nothing while their property was foreclosed. Further, many
homeowners who went through a short sale process are now being denied funding because their credit
reports improperly reflect a past foreclosure rather than a short sale.
So what can be done? Reportedly, credit agencies are working to implement a code for short sales, and
a new form letter is being circulated that allows banks to certify a short sale was completed. Our advice
is to hold onto the paperwork you received from the bank approving the short sale. While it is not an
iron clad solution, presenting the approval letter to a lender to obtain financing can go a long way in
helping to re-establish your creditworthiness.