Sunday, May 25, 2008

Paid In Full and Credit Report after Short Sale

Someone asked me a question about this. Here's my reply:

You must have your realtor request that your 1st and 2nd mortgagors give you a letter stating that your account has been "...Paid In Full." I think "Account Settled" is also just as good but you would need to speak to an attorney about that. If you can, get them to also state in your letter something along the lines of "No balance due." and maybe something about they "release all liens".

I pulled my credit reports: TransUnion, Experian, Equifax.

Experian shows this for both my 1st and 2nd:
Payment Status: "Legally paid in full for less than the full balance"
Comments: "Election of remedy - reported by subscriber"
(also lists it as a "Key Derogatory") shows my 1st as "Improved account" for TransUnion shows my 2nd as "not yet reported" the change to TransUnion shows my 1st as Settlement for Experian shows my 2nd as Settlement on Experian

TransUnion lists the Condition as "Derogatory" for the 1st but Pay Status is "Current"
Experian lists the Condition as "Closed (Paid)" for the 1st and no Pay Status.
Experian also shows it as a CO - Chargeoff.
Equifax lists the Condition as "Closed (Paid)" for the 1st and Pay Status as "Current"

TransUnion lists the Condition as "Derogatory" for the 2nd but Pay Status is "Late 120 Days"
Experian lists the Condition as "Closed (Paid)" for the 2nd and no Pay Status.
Experian also shows it as a CO - Chargeoff.
Equifax lists the Condition as "Closed (Paid)" for the 2nd and Pay Status as "Late 30 Days"

I closed (recorded) two weeks ago but my realtor is waiting for Title company to send the official letters from the mortgage companies to them so that they can in turn send them to me. But I did call my 1st mortgage company and the loan servicer of my 2nd (a mortgage backed security sold by Wells Fargo but loan serviced by GMAC) during the the process of closing and they both told me I was Paid In Full. My realtor has the letters but is waiting for more paperwork from the Title company before forwarding on to me.

Since I can see it listed on my credit reports as Paid In Full I'm not worried about any collection agencies coming after me. I will need to file a Form 982 with my taxes next year to show I am Insolvent. Anyone that reviews my assets (zero) and liabilities would see that I am going to be insolvent for the next 3 to 4 years.

(5/27/08 Tuesday 6am PST - And with the way my life at home is now going I may be heading toward divorce in a year. I told my wife that I really don't think we're going to have the proper debt-to-income ratios in a year - I think we're really going to be renters for at least two years; I still have so much debt to pay off. She's going to open up her own checking account and then have her paycheck direct deposited into her own account. She said she was watching Dave Ramsey last night and she needs to take ownership of her own life. And I think intimacy between us stopped last week. We had a bad weekend talking about finances. It's awful this has happened to us - next month is our 22nd anniversary and she and I had talked about going to Vegas but that's not going to happen now. Basically she married the wrong person. It's funny, I think what will probably happen is that she'll end up marrying our landlord. He's funny, happy and rich. It's probably easier to be happy and funny when you're not worried about money all the time.)

Good-luck with your short-sale and let me know how it goes.

No comments: