Reply to question:
” I read over your article regarding short sales and security clearances; I have a question about deed in lieu of foreclosure and how it would affect the renewal of a security clearance. I am in Alabama, but the way if affects an individual should be the same regardless of state.”
Thanks for reading our website… Not completely sure of your current situation with your home in Alabama. Should you be in a time where you are needing too sell this home and you are “upside Down” on the property, I would recommend finding an experienced real estate agent/broker who has successfully completed several short sales. If you can find an agent who has completed the “Certified Distressed Property Expert (CDPE)” designation that would also be beneficial to you.
I cannot give legal advise, or comment on you clearance with the DOD. But what I do know is that during the review on your background file, they do complete a credit check. We have just successfully completed a short sale with a young family in the Military. The banks realize that this is an issue and should work to help you successfully complete the short sale process. I would recommend trying to avoid any foreclosure or deed in lieu as they are the same and will impact your credit score in the negative. Additionally I would contact you’re commanding officer (CO) and notify them of this pending issue. He might also be able to direct you in a direction of support. We understand that this dilemma is now affecting every income level. In our real estate market (Phoenix, Az) , over 65% of all real estate sales are now either Short sales, or foreclosures. When the decision is made to go for a short sale, it is very important to write a strong “Hardship Letter” that the banks require and state your hardship, including the fact that you are in the military and this could affect your future in the military.
How Will Foreclosure or Short Sale Affect My Credit Score and Credit Report?
Foreclosure or Deed-in-Lieu of Foreclosure – Both of these will affect your credit report and scores the same. The status of your overall credit when you either fell behind or will fall behind on your mortgage has an impact on the amount your credit scores will fall, which is usually between 200 to 300 points. The effect on your credit report and scores due to a foreclosure or a deed-in-lieu of foreclosure will be minimized if you had credit scores higher than 700 with impeccable credit history than if your credit was unfavorable.
Short Sale – Your payment history with your lender and how it is maintained will influence what happens to your credit rating during a short sale. If you do not become delinquent on your mortgage payment as you go through the short sale process then your credit should be minimally affected by a short sale. However, if you fall behind on payments during this time, your credit report and credit report will decrease sharply based on the number of payments on which you fall behind. Conversely, it will not be as bad as what you will suffer if you experience a foreclosure.
We wish you the best and if we can help find you an agent in your area to help you, please let us know.
