Doing "Short Sale", need advice

[BUDMANKDB]

Had this in "Credit Repair" forum, was told I might get more responses here

Hi,

I just joined this board today, but have been reading posts for about a week.
My wife and I are seriously considering a "short sale" of our home. We are behind on our payments and have too many medical bills to catch up anytime soon. My question is:
How does this get reported on credit?
Can I negotiate how it gets reported?

Also, the packet my mortgage company sent me is asking us if we are willing to sign an unsecured note to pay off the difference between what we owe and what the house sells for. Can I use this to negotiate with them on how it gets reported? I don't mind paying the debt off as long as it shows "paid in full" or something like that on my CR.

Anyone have any advice?

Thanks

[firstsource]

There are actually 2 issues here.

One is how your mortgage payments are being reported. That will show 90 or 120 day late. Those late payments will drag your scores down for 2 years and depending on the next lender - if there are any 120 day lates noted it could hurt for 3 years as they are looked at the same as a foreclosure. Even if it did not get that far.

The other is how you are handling the shortfall. Since it sounds like you are not considering going bankrupt after the bank gets the property back, you will be liable for the short amount. I think that you are being overly wonderful to be willing to pay the bank/lender the difference between what you owe and what they sell your home for.

I have not seen any positive reporting on short sales that are paid off, but that does not mean that it does not happen.

Charles