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Incorrect Reporting by Banks on Short Sales
When a homeowner decides to do a short sale rather than just letting the home go to foreclosure, the main consideration is to keep a foreclosure off their credit record. The homeowner does not gain anything else. No cash, and they do not have their home any longer.
The bank avoids losing $30,000 to $50,000 more by the home being sold by short sale, then if it went to foreclosure. Another advantage the bank has is there is not as much risk for the home to be vandalized if it is sold by short sale. This is because the home is not sitting there for as long of time, as it is with a foreclosed home.
Despite this, I have experienced recently, several past homeowners who had me do a short sale, call me because the bank reported the short sale as a foreclosure. In my contracts, I specifically say for the bank to report as "paid as agreed". Which is the correct way of reporting.
Okay...banks... let's get this straight. Is this just another example of non communication between departments, or is this a "little" lie the banks are doing in reporting to the credit bureaus. I want to believe it is poor organization on the part of the bank. I see that everyday in dealing with the banks in doing short sales. But,...I wonder...could it be something they are doing to the homeowner because they did a short sale? A short sale that the bank caused to happen because the homeowner would never be able to afford the payments at a higher rate. Could this be something they are doing to "get back" at the homeowner??
The calls that I have had, have been from two different banks. In both instances, I advised the homeowner to demand a correction of the credit report.
So whether this is a careless oversight, or a deceitful act, if you do short sales, or have had a short sale negotiated for you, please double check on your credit. It is better to get the credit corrected before you have it pulled for a credit check.
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The bank avoids losing $30,000 to $50,000 more by the home being sold by short sale, then if it went to foreclosure. Another advantage the bank has is there is not as much risk for the home to be vandalized if it is sold by short sale. This is because the home is not sitting there for as long of time, as it is with a foreclosed home.
Despite this, I have experienced recently, several past homeowners who had me do a short sale, call me because the bank reported the short sale as a foreclosure. In my contracts, I specifically say for the bank to report as "paid as agreed". Which is the correct way of reporting.
Okay...banks... let's get this straight. Is this just another example of non communication between departments, or is this a "little" lie the banks are doing in reporting to the credit bureaus. I want to believe it is poor organization on the part of the bank. I see that everyday in dealing with the banks in doing short sales. But,...I wonder...could it be something they are doing to the homeowner because they did a short sale? A short sale that the bank caused to happen because the homeowner would never be able to afford the payments at a higher rate. Could this be something they are doing to "get back" at the homeowner??
The calls that I have had, have been from two different banks. In both instances, I advised the homeowner to demand a correction of the credit report.
- Use the HUD1, (closing statement) with a letter to the credit bureau to dispute the record.
- Also, contact the bank and use your copy of the HUD1 to demand their correction on the credit reports.
- I also offered to write any letters needed.
So whether this is a careless oversight, or a deceitful act, if you do short sales, or have had a short sale negotiated for you, please double check on your credit. It is better to get the credit corrected before you have it pulled for a credit check.
Have a comment about this? Please feel free to comment.
Have you subscribed to Real Estate Investor Girl? Why not Subscribe now?
Give this article a boost! Share on these sites:
I would love for you to follow me on Twitter, I follow back!
Posted by Kathleen Couch at 8/15/2009 12:05 PM 
Categories: Short Sale
Tags: real estate short sale agents homeowner foreclosure
Categories: Short Sale
Tags: real estate short sale agents homeowner foreclosure
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