Short sale showing as charge off/ bad debt ??

[Anonymous]

I'm sorry if this isn't in the right place, but I wasn't sure exactly where to post it.

We just completed short sales on two properties in the last few months and the amounts were settled at a lesser amount than owed of course. Yesterday when we pulled our Transunion, they show as charge off/bad debt and collections. And one just says 120+ days late. WHY?? Can they do that? Shouldn't it report as "Paid- settled"? 

Part of the whole point of doing a short sale for us was to avoid having a foreclosure show on our credits and destroy it for 5-7 years. I knew our credit would suffer from a short sale, but this is worse. I'm so frustrated. Is there nothing we can do about this?

If it matters, the banks were Chevy Chase, Homecomings Financial, and Marshall & Isley (M&I). And we are not being taxed on the difference. Also, if it makes any difference, it took about 5 months to sell one of the properties, and 10 months to sell the other.

Message Edited by rvtprincess on 11-30-2008 08:07 AM

Message Edited by rvtprincess on 11-30-2008 08:14 AM

Message Edited by rvtprincess on 11-30-2008 08:27 AM

Message Edited by rvtprincess on 11-30-2008 08:47 AM

[Anonymous]

I believe that since they are still taking a loss on the account, they can report it as the difference being charged off.  That is the problem with short sales.  Depending upon how the creditor reports it, it can hit you almost as bad as a foreclosure.   I have seen some reported this way and I have seen some reported as paid/settled.  But, if it shows 120 days late, that is considered foreclosure by most standards.  Were you behind on the payments prior to the short sale.  If you were, then this is probably being accurately reported.  If all payments were on time prior to the short sale, you could probably dispute this somehow. 

[BrianB_The_Loan_Professor]

They can report it any way they want from what I understand

Unless you pay as agreed you rcredit will get hit

if you stopped making payments that 120 is a foreclosure

Sorry but I would suggest starting to rebuild credit now and if things stay the same

you can buy again in 3 yrs

B

[ShanetheMortgageMan]

Even though there is a motatorium on it now, just be thankful you didn't get a 1099/taxed on the difference they "wrote off".

[Anonymous]

First of all, I just want to sI ay I am not an expert on any short sale stuff.  I am just posting my experience.

We just closed on our short sale a month ago.  Due to my husband getting a new job out of state, we had to move.  No other options.

Anyways, I asked the mortgage company how the short sale would appear on the credit report and they said settled for less the balance.  I also have it in writing.  I did get a copy of my credit report and it said, foreclosure in process.  So I just disputed the incorrect item and put needs to say settled and the balance is 0.  That was updated and corrected. 

From what I understand, as long as you did a short sale, there has to be some resolution on your credit such as settled.  It will still show all your past due payments.  Once you have resolved the debt, it should be report accordingly.

On the other hand, we have been working with a loan company for a new mortgage in our new state.  We were told once the short sale goes through, we are to send them the HUD1 form and that will prove that we did our short sale.  We have talked to about litterally 50 different lenders in the beginning to find out what our options were.  Some lenders said they read the credit report and even if it is settled, it is almost the same as a foreclosure.  It just depends on the loan company and how they want to read it.  Some companies wouldn't work with us at all, but some said once the short sale is done and over with, we could still have options.  We still have pretty decent credit.  It went down once we stopped making our payments by 150 points, but once it got reported as settled, it surprisingly went back up.

Like I said, I am no expert, but I just went through it and wanted to share what happened to me.

[Anonymous]

just a stretch here, but did you have 2nd's on the property, such as a HELOC?

Some banks charge off the 2nd's, very well could be what is reporting on your credit, and they still might 1099 you, but from my understanding apparently it is pretty easy to avoid considering the economic situation at hand.

[Anonymous]

rvprincess - it's been 2 years since your post - but right now I'm going through the same thing with a 'charge-off' reading on my credit when I have a letter from Chevy Chase bank saying the loan balance would be forgiven.  I don't think the two match and I'm asking the bank to change their reporting to at least 'settled, zero balance'.

What happened with your situation? Your response is much appreciated.

[niceshort]

Any update here?  We are in the same situation....