There's a Disputing secret that can remove Short Sales and boost your Credit Scores up to 160 points, and today I'm gonna teach you exactly how to do it!
Short Sales don't sound as bad as Foreclosures, but they're reported the very same way, and they do just as much damage to Credit Scores.
For anyone new to Credit Repair, a Short Sale is when you can't make your mortgage payments, so you sell your property for less than the amount you still owe.
That loss is known as the "Deficiency."
Banks often say Short Sales are better options than Foreclosures because they allow homeowners to avoid the stigma of a Foreclosure, but in reality, most lenders won't distinguish between the two.
Short Sales and Foreclosures are both reported to the Bureaus as "settled for less than full amount" or "not paid as agreed." So the fallout is the same.
HERE'S HOW THIS RELATES TO US
Short Sales rise when home values fall. They spiked from 2007-2009 during the Great Recession, and they could be on the rise again.
Short Sales usually stay on credit reports for up to 7 years, but if payments were missed, the clock doesn't start until the date of the first delinquency.
According to FICO, the impact of a Short Sale depends on what your Credit was like before the sale closed.
Unbelievably, the higher your Credit Score was, the further it will fall!
If your Credit Score was GOOD, a Short Sale could drop it 100 points. But if your Credit Score was EXCELLENT, a Short Sale could drop it as much as 160 points! I know this sounds crazy, but that's the Credit System!
Short Sales are complicated, frustrating, and difficult to get rid of, but that's why I worked so hard to find the secret to Disputing them!
HERE'S THE THING TO REMEMBER
Before you Dispute a Short Sale, confirm your obligation to the Deficiency, and determine what, if anything, you still owe.
Some lenders may ask you to sign a new promissory note saying you'll pay the remaining debt, while others reserve the right to bill later. Some Banks will try to collect the money immediately after the sale closes, while others will turn the debt over to a collection agency. In some cases, a portion of the loan can be forgiven, but those are rare.
Confirming your obligation to the Deficiency gives you the opportunity to get in good standing with the lender. And if you're in good standing with the lender, you'll have more options when you start Disputing.
HERE'S WHY THIS IS IMPORTANT
The first step to disputing negative items on credit reports is removing any conflicting personal information from your reports.
Unfortunately, when it comes to Short Sales, other than pointing out incorrect personal info, basic disputing techniques often don't work.
You can dispute them, follow up, ask for reinvestigations, send warnings, or file complaints, but 9 times out of 10, they still just get verified.
The good news is that I discovered the secret to removing them, and it's actually incredibly simple.
HERE'S WHAT YOU NEED TO KNOW
The Credit Reporting Bureaus (Equifax, Experian, and TransUnion) don't even use the word "Short Sale." It's not in their vocabulary!
They use account status codes to communicate with furnishers and for reporting purposes.
For example, if your account is sent to Collections, there will be a specific two-digit code that the furnisher reports to the Bureaus to indicate the account was sent to Collections.
If the account is Charged-Off, there will be a two-digit code for that.
If your vehicle was Repossessed, there's another code for that.
But when it comes to Short Sales, NO CODE EXISTS!
The Bureaus never identify "Short Sales" with a unique status code. They almost always report them as foreclosures! And that's the secret to deleting Short Sales from credit reports!
HERE'S HOW IT WORKS
STEP 1: Dispute the Short Sale with the BUREAUS!
The letter can be really simple. You just list the Short Sale, the account or reference number, and the reason for the dispute, like: "This Short Sale is inaccurate. Please remove it."
You can use a ROUND 1 Letter.
If you don't already have a ROUND 1 Dispute Letter Template, you can download it FREE at CreditRepairCloud.com/Dispute-Letter-Templates.
If the Short Sale is removed, great! You're done. If not, you'll get a response stating it was verified, and you should move to Step 2.
STEP 2: Dispute the Short Sale with the LENDER!
This letter is also very simple, but this time you're contacting the Lender directly, not the Bureaus.
You can use a ROUND 1 Letter again, or if you have a Credit Repair Cloud account, you can also use the Furnisher Dispute Letter in our Letter Library.
Fill out the letter, and dispute the Short Sale, but this time, make sure to request the current status of the Short Sale. This is important!
STEP 3: Wait for the RESPONSE!
When you receive the response from the Lender, 9 times out of 10, it will be verified, and they'll clearly identify the account status as a "Short Sale."
This response is exactly what you need to get it removed!
STEP 4: File a COMPLAINT!
Now that you have proof that the Bureaus verified the item as a "Foreclosure," and you have proof from the Lender it's actually a "Short Sale," it's time to file a complaint with the CFPB!
You can file these complaints online at ConsumerFinance.gov.
After filing your complaint, save a copy or take a screenshot because you'll need it in the final step!
STEP 5: Send Warning Letters to the BUREAUS!
Send a Warning letter with a copy of your complaint to each of the three Credit Bureaus. Point out the facts and show your proof.
Tell them they're inaccurately reporting a Short Sale as a foreclosure. Tell them that you have filed a CFPB complaint and you're considering legal action if the account is not removed immediately.
Warning Letter Templates are also available to Download FREE at CreditRepairCloud.com/Dispute-Letter-Templates.
If you follow these steps - you will almost always get a deletion. The Bureaus understand they're wrong and will do anything to correct it.
I say "almost" because there are some cases where the Bureaus simply ignore you or they respond inappropriately.
If that happens, there is one additional step you can take that will get a deletion 100% of the time. Contact an FCRA Attorney!
They will often help you for FREE in return for getting part of your cash settlement.
If you want to learn more about FCRA Attorneys, check out my episode: FCRA Attorneys for Credit Repair.
One last note about this 5-Step Process: In some cases, Lenders will use a status code "A.U." to mark Short Sales. "A.U." is a special comment code designated for random statuses that aren't significant enough to have their own status code.
If the status code "A.U." is used, it may be a rare circumstance that this method may not work, and in that case, you would want to dispute the Short Sale based on other factual errors.
MY FINAL POINT
A Short Sale not only means someone lost their home, it means their credit has been damaged so badly that they won't be able to buy a new one for a very long time.
So, if you're one of the millions of Americans who have gone through a Short Sale, take action and start the dispute process today! Remember, financial freedom is within reach. You just need to take these 5 Steps!
I'll end by saying…
If you don't already have a Credit Repair Cloud account, check it out. It's the software that most Credit Repair businesses in America run on. Just sign up for a 30-Day Free Trial at CreditRepairCloud.com/freetrial
And if you'd like to change lives and grow your own credit repair business, check out our Credit Hero Challenge!
It's an amazing program, and we've got another challenge starting in a few days, so grab your spot right now at CreditHeroChallenge.com!
So take care, Credit Hero!
Keep Changing Lives!