SHORT SALE vs. FORECLOSURE vs. BANKRUPTCY

In Salt Lake County, roughly 30 percent of active listings are short sales. In addition, another 10 percent are foreclosures.

“Distressed properties, in the form of short sales and foreclosures, are hard to avoid these days as tens of thousands of Utahns struggle to pay their monthly mortgage payments,” reported The Salt Lake Tribune. “Realtors and others attending the 2012 Housing Summit say that as a result, their jobs have become more complex in recent years.”

For those facing distressed property sales, it’s important to understand that there’s no significant difference in FICO score impact among foreclosures, short sales or deeds in lieu of foreclosure.

According to myFICO.com, alternatives to foreclosure, “such as short sales and deeds-in-lieu of foreclosure are all reported as "not paid as agreed" accounts, and considered the same as foreclosures by your FICO score.”

The FICO report added that people considering bankruptcy as an alternative to foreclosure, may see a greater impact to their FICO score because a foreclosure is a single account that you default on, while declaring bankruptcy has the opportunity to affect multiple accounts and therefore has potential to have a greater negative impact on your credit score.

However, a number of new loan products by Utah Housing Corp. and other lenders are now marketing products that target previous home owners who have faced financial bumps, such as short sales and foreclosures.