Last week I began a discussion on how a short sale would affect your credit as opposed to allowing your home to go into foreclosure.  There is a far greater impact on your credit if you do not take steps to sell your property as a short sale (see Part I also). 

Here are a few more differences between a Short Sale and Foreclosure:

Security Clearances:

Foreclosure:  The most challenging issue against a security clearance outside of a conviction of a serious misdemeanor or felony.  If a client is in the CIA, Military, Security, a police officer or holds any other position requiring a security clearance, in almost all cases the clearance will be revoked and the position will be terminated!                                                                            

Short Sale:  A Short Sale on its own doesn't challenge most security clearances.
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Current Employment:

Foreclosure: Employers have the right to check employees credit regularly.  A foreclosure in many cases can be grounds for immediate termination or reassignment.

Short Sale:  A Short Sale isn't reported on a credit report and is not a challenge to employment.
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Future Employment:

Foreclosure:  Many employers are required to run a credit check on all job applicants.  A foreclosure is one of the most detrimental credit items an applicant can have and in most cases will challenge employment.

Short Sale:  A Short Sale is not reported on a credit report and is not a challenge to employment.
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Deficiency Judgement:

Foreclosure:  In 100% of foreclosures (except in states where there is no deficiency), the bank has the right to pursue a deficiency judgement.

Short Sale:  In some successful Short Sales it's possible to convince the lender to give up the right to pursuit a deficiency judgement against the homeowner.
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Deficiency Judgement  (Amount)

Foreclosure:  A foreclosure will go through an REO process if it doesn't sell at the auction.  In most cases this will result in a lower sales price and longer time to sale in a declining market.  This will result in a higher possible deficiency judgement.

Short Sale:  In a properly managed Short Sale, the home is sold at a price that should be close to the market value and in almost all cases will be better than an REO sale resulting in a lower deficiency.
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If you need help with your current situation, contact me and I will be glad to assist you.  Our office specializes in Short Sales and can assist in getting your home sold before it goes into foreclosure. 

-Derek Heppe
Ace Realty