The answer is unfortunately more complicated than it should be. Senate Bill 458 and 931 dictate under CA law that lenders are to report the account as “paid as agreed”. Lenders are not doing this. Most banks, including Bank of America, will report the account as “Paid in full for less than the full balance”. The lender is required to send this updated status (short sale) to the credit bureaus, however each of the big 3 commercial credit bureaus can “interpret” this new status in different ways. Equifax and TransUnion may show “settled for less than full balance”, while Experian may show “paid as agreed”. The bureaus may also disagree on how many mortgage late payments there were. I’ve seen scenarios where one bureau shows 150 days late on an account and another shows no late payments. Even more concerning are the NOT uncommon instances where the account shows as “foreclosure”, even though a short sale was completed. It is the lenders responsibility to update the credit bureaus with the short sale status, however it’s common to have an incorrect status or amount of late payments on one or more of the bureaus.
So what can you do to ensure the “best” status shows up on your credit after a short sale?
I’ve had some of my own short sale clients do this over the past few years and they’ve had varied success, however most had some improvement to how their reports reflect the short sale and late payments. What you don’t want to do is complete the short sale and never look back. This is what many people do and it ends up biting them in the butt down the road when they try to purchase again.
Call me! I’m here to help with your short sale needs and questions in San Diego…
The Ruhl Team
**Over 500 Short Sales Sold…**
REALTOR/Short Sales, HAFA Certified
www.SanDiegoHopeNow.com / www.TheRuhlTeam.com
3636 Nobel Drive Suite 170, San Diego CA 92122
Lic# 01493664 (SDREAI)
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