Foreclosure Consequences

• You will be ineligible for a government-insured loan for 5 to 7 years (only 3 years in a short sale).
• You always must disclose that you had a foreclosure on any mortgage application and many job applications.
• Credit scores can be significantly lowered

Security Clearances

• Many jobs and professions require a security clearance, not limited to Government jobs, Military, Law Enforcement, etc.
• Foreclosure can jeopardize their security clearance and risk loss of employment.

Possible Deficiency Judgement

• Check if your State allows the lender(s) to pursue a deficiency judgement against the borrower(s). If so, the lender(s) to sue the borrower to recover losses.
• Applies to both Short Sales & Foreclosures.
• In a properly executed Short Sales, the lender(s) waive the right to pursue a deficiency judgement.

Tax Liability

• Forgiven debt is considered taxable income.
• It is possible in a short sale the amount of loss to the lender will be less than in a foreclosure, this means less debt forgiven.
• Mortgage Forgiveness Debt Relief Act of 2007 provided relief to homeowners that qualified. The program expired on December 31, 2012.
• Homeowner should speak with a Tax Professional.