My sister is trying to settle an underwater 2nd mortgage with her lender. She has remained current in all payments. Would a settlement for less than the full value of the note affect her credit?
What about if she arranged a short sale of the home? Does a short sale negatively impact your credit?
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Tags: mortgage, short sale
Anytime that you do not meet the conditions of the original note it can effect your credit rating. The lender would likely report this on her bureau as "settled for less than full balance" and the next lender would probably avoid doing a new mortgage for her like the plague. A short sale of the home would have nothing to do with the lender unless they didnt get full payment, in which case it would be the same result as the above. Good luck!
Of course i impacts YOUR credit. Short sale goes on the credit too.
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