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I heard that in June short sales if you qualify (with no late payments on the history) will be updated with a 13 rating which may be nuetral to the credit scores. Is it true that a 13 rating means it is nuetral and won't hurt the scores? Please let me know I had asked about a month ago as well with no response.
Thanks
Account status 13 indicates a Paid account/zero balance. Account status is used in conjunction with other fields, such as comments or Payment History that would still indicate a Short Sale or paid for less than full balance, which would still carry a signifcant FICO scoring ding.
Can you post a link to the article that explains the differences ? I really can't say that it would be less, but I would have to understand the changes that were described.
This chart has been around for a while, it explains the approximate damage that can occur, short sales are usually on par with foreclosures.
DAMAGE POINTS: HOW MISTAKES AFFECT FICO SCORES
Credit mistake If your score is 680 If your score is 780
Maxed-out card
Down 10 to 30 pts. Down 25 to 45 pts.
30-day late payment
Down 60 to 80 pts. Down 90 to 110 pts.
Debt settlement
Down 45 to 65 pts. Down 105 to 125 pts.
Foreclosure
Down 85 to 105 pts. Down 140 to 160 pts.
Bankruptcy
Down 130 to 150 pts. Down 220 to 240 pts.
Source: FICO
harp supplement here is the supplement. The part about the update to the credit bureaus is close to the bottom of the pdf. Please let me know what you think. and if you could give me as much detail on how this might change things I would greatly appreciate it.
I did a few google searches on HAFA, and various websites descibes the following benefits of this program:
Posted below is what I read at the top of page 19 of the link that you posted. I don't know how the Handbook previously instructed short sales to be reported, so I really don't know at this point how to quantify the impact to credit reporting. Do you happen to have any information regarding what Section 11.2 Chapter IV previously stated ?
The requirements in Section 11.2, Chapter IV of the Handbook related to credit bureau reporting of HAFA transactions are amended as follows:
If the real estate is sold for less than the full balance owed and the deficiency balance is forgiven, report the following Base Segment fields as specified:
Account Status Code = 13 (Paid or closed account/zero balance) or 65 (Account paid in full/a foreclosure was started), as applicable.
Previously short sales were updated as a settled account and dropped scores 100's of points if you had a 740 plus. I just want to know how this new rating is better since that is what they are saying in this supplement. It seems no one knows. Please see if you can find anything else out about it.
Thanks
11.2 Credit Bureau Reporting
The servicer should continue to report a “full file” status to the major credit repositories for each
loan under the HAFA program in accordance with the Fair Credit Reporting Act and the CDIA’s
Metro 2 Format credit bureau requirements. “Full file” reporting means that the servicer must
describe the exact status of each mortgage it is servicing as of the last business day of each
month. The Payment Rating code should be the code that properly identifies whether the account
is current or past due within the activity period being reported – prior to completion of the HAFA
transaction. Because CDIA’s Metro 2 format does not provide an Account Status Code allowable
value for a short sale, a short sale should be identified with the reporting of Special Comment
Code “AU”. The information below is consistent with “CDIA Mortgage and Home Equity Reporting
Guidelines in Response to Current Financial Conditions” (May 2009).
Reporting for short sales should be as follows:
Account Status Code = 13 (paid or closed/zero balance)
Payment Rating = 0, 1, 2, 3, 4, 5, or 6
Special Comment Code = AU (account paid in full for less than the full balance)
Current Balance = $0
Amount Past Due = $0
Date Closed = MMDDYYYY
Date of Last Payment = MMDDYYYY
Reporting for DILs should be as follows:
Account Status Code = 89 (deed-in-lieu of foreclosure on a defaulted loan)
Payment Rating = 0, 1, 2, 3, 4, 5, or 6
Current Balance = $0
Amount Past Due = $0
Date Closed = MMDDYYYY
Date of Last Payment = MMDDYYYY
I took this from the original Hafa rules here is the link Hafa rules
@ycart wrote:11.2 Credit Bureau Reporting
The servicer should continue to report a “full file” status to the major credit repositories for each
loan under the HAFA program in accordance with the Fair Credit Reporting Act and the CDIA’s
Metro 2 Format credit bureau requirements. “Full file” reporting means that the servicer must
describe the exact status of each mortgage it is servicing as of the last business day of each
month. The Payment Rating code should be the code that properly identifies whether the account
is current or past due within the activity period being reported – prior to completion of the HAFA
transaction. Because CDIA’s Metro 2 format does not provide an Account Status Code allowable
value for a short sale, a short sale should be identified with the reporting of Special Comment
Code “AU”. The information below is consistent with “CDIA Mortgage and Home Equity Reporting
Guidelines in Response to Current Financial Conditions” (May 2009).
Reporting for short sales should be as follows:
Account Status Code = 13 (paid or closed/zero balance)
Payment Rating = 0, 1, 2, 3, 4, 5, or 6
Special Comment Code = AU (account paid in full for less than the full balance)
Current Balance = $0
Amount Past Due = $0
Date Closed = MMDDYYYY
Date of Last Payment = MMDDYYYY
Reporting for DILs should be as follows:
Account Status Code = 89 (deed-in-lieu of foreclosure on a defaulted loan)
Payment Rating = 0, 1, 2, 3, 4, 5, or 6
Current Balance = $0
Amount Past Due = $0
Date Closed = MMDDYYYY
Date of Last Payment = MMDDYYYY
I took this from the original Hafa rules here is the link Hafa rules
It sounds like the new rules do not dictate using the special comment code AU to indicate a short sale ~ at least this is omitted from the new instructions. Based on that it would appear to me that if the account was never deliquent that it would not be coded with any derogatory status, since it would be given accounts status 13 and payment rating 0.