Matthew A. Sidor

Attorney At Law

Short Sale

Is your reality one that you cannot find prospective purchasers for your home that are willing to pay an amount needed to completely pay off your mortgage loan? In these instances, you may seek approval from your mortgage lender to allow you to sell the home for less than what is owed on the loan. Mr. Sidor has the experience and know-how to assist and best ensure your likelihood of success in these efforts.

Your eligibility to sell your home in a short sale transaction is subject to very subjective criteria depending on your lender. If you have lost your job or encountered medical problems, you may be more likely to be allowed to do a short sale. Convincing the mortgage lender of financial hardship is typically the first step in the process and should be carefully crafted with the help of Mr. Sidor in order to gain the necessary attention among other applicants.

Although some lenders are occasionally more expeditious, it can take 4 to 6 months to close a short sale transaction. Mr. Sidor regularly and systematically communicates with the lender to proceed in due course, keep you apprised of developments over this time frame and draft contract terms to protect you if the transaction does not close.

Once a lender concludes that a property is heading to foreclosure, they can mitigate their losses by taking a “haircut” on the mortgage balance. One frequently cited figure is that a lender losses about 30% on a short sale but over 50% if the property is foreclosed upon.

Consider a short sale versus foreclosure:


Short Sale


Credit Score

Only late payments on the mortgage will be reported as paid or negotiated1  According to Fair Issac2 which developed FICO scores, the average hit is 85-160 points depending on other variables. If all other payments are being made, the credit score impact can be as brief as 12-18 months.1

Score can be lowered anywhere from 250 to 300 points and typically will affect credit score for over 3 years.1  

Credit History

Not reported and loan typically reported as “paid in full” or settled.1  

Foreclosure remains as a public record on a person’s credit history for 10 years or more.

Deficiency Judgment

May be possible to convince lender to waive their right to pursue a deficiency judgment [but if Bank issues a 1099 form to the IRS for the relieved debt, income taxes may be due on that amount].

Bank has right to pursue borrower for the deficiency amount from the borrower.


Not reported.1  

Is reported and can impact employment opportunities.

Future Loans

If short sale is successfully negotiated and closes, one is eligible for a FannieMae backed mortgage after only 2 years.1  

A homeowner who loses a home to foreclosure is ineligible for a Fannie Mae backed mortgage for a period of 5 years [7 years for investors].  Additionally, borrowers may have to pay higher rates when having to admit on future loan applications that they have “had a property foreclosed within the past 7 years.”

Source – 1Courtesy of Distressed Property Institute and [April 22, 2010]