topic Re: Need clarification about charge off/ settled for less means on short sale in Mortgage Loans

Need clarification about charge off/ settled for less means on short sale

Melody95 — Tue, 16 Nov 2010 15:55:21 GMT

Last year we completed a short sale of our home, it had a 1st and 2nd mortgage. When I checked our credit, it showed the second mortgage reading:

Charge off/Collections

Settled for less then full

0 due

it also doesn't list any lates, but it was 3 months late

When I look at the collections category of our credit report it says we don't have any collections. So, my question are:

1. Is this in collections?

2. Do I need to do something about this before we try to get another mortgage someday - way in the future

3. Do I do nothing and just let time go by to continue improving our credit.

4. How long does this last on the credit report?

My score isn't terrible - it's about 711 on transunion and I've been able to get a car loan at a good rate...I'm just concerned about this issue and being able to secure another mortgage someday in the distant future.

Thanks

Re: Need clarification about charge off/ settled for less means on short sale

LIGHTNIN — Tue, 16 Nov 2010 16:48:50 GMT

welcome to the forums,You've come to the right place

Hi Melody95, Sorry but i don't know anything about short sales.But i do have a question.

Was your home sold enough to pay the 1st mortage only? or the 1st and part of the 2nd?

Answer to question #4 is 7-7.5 yrs from theDoFD

Good news...There's some mortgage guys that hang out on this board,so maybe one of them can answer your questions.

Glad to see your post, and dont worry about posting on the wrong board, the MOD's will move your post to a board they think will get the most replies

Re: Need clarification about charge off/ settled for less means on short sale

Anonymous — Tue, 16 Nov 2010 17:32:54 GMT

I believe, in a short sale, by agreeing to the sale they are accepting the parital payment and can not come after you for the deficiency. Again, I think that is how it works. That said, when you are talking 2nd mortgages you do not have as many protections as there are on 1st mortgages and there may be some local/state laws affecting what they can or can not do. Your best bet would be to contact a local real estate attorney and have him look over all of your documentation and give you a solid answer.

Re: Need clarification about charge off/ settled for less means on short sale

ShanetheMortgageMan — Tue, 16 Nov 2010 18:09:33 GMT

As far as qualifying when you have a short sale and there were late payments or new collections/charge-offs either on the mortgage or consumer debt, it is considered the same severity as a foreclosure. Foreclosures need anywhere from 2-7 years of seasoning (2-years for VA, 3-years for FHA or conventional with extenuating circumstances, or 7-years for conventional without extenuating circumstances) before you'd be eligible for new mortgage financing again. Guidelines change all of the time, lately they've been changing towards more conservative guidelines, but as the real estate market starts to loosen up so will the mortgage qualifying guidelines... and foreclosures may have a shorter seasoning requirement in the future.