Life After A Short Sale in Baltimore


What happens after a short sale closes? 

Here at Heise & Heise, LLP, one of the few Baltimore law firms concentrating in short sales, we have been thinking that our current short sale clients might be interested in that very question. We reached out to ten former clients who successfully completed short sales from 2012 through 2015 and asked if they would be willing to take part in a short interview. Those that responded did so because they felt very strongly about helping out those who are just beginning their own short sale journey and wanted to share their experiences. What they shared with us was very interesting and is explored in detail below.

What happens to my credit after a short sale? 

Most of our former clients indicated that at the completion of the short sale, their credit scores hit lows in the mid-400s to low-500s which would be considered a bad or poor, credit score by industry standards. All of those interviewed who recently checked their credit scores informed us that their scores are now good or excellent with most falling into the good category of 700-749. The most exciting example was the client whose credit score bottomed out in the low-400s at the completion of the short sale and has since rebounded to the mid-700s in just two years! On average the rehabilitation of credit scores took 12 to 18 months.

Will I be able to purchase a new home or car after a short sale? 

Over 70% of those interviewed informed us that they have purchased a new home since they concluded their short sale. The financing placed for these new home purchases has varied from commercial loans to FHA loans with competitive interest rates. The remaining individuals interviewed are considering home purchases but are not quite ready to take that step. An interesting side note is that all of those interviewed have purchased new cars since the conclusion of their short sales. 

Will I have to pay anything to the lender as part of the short sale? 

All of the former clients with whom we spoke confirmed that they did not have to contribute to the loss that the lender(s) experienced as part of the short sale. Additionally, most of these individuals were able to benefit from the since expired  Debt Forgiveness and Relief Act and no taxes were owed on the forgiven debt. While this act has not been renewed most clients pursuing a short sale presently may avail themselves of other exemptions provided by the Internal Revenue Code to escape tax liability.

Were there any other interesting facts to share?

Our former clients also had a few tips and observations that we feel are worth sharing. One person went through a second short sale using a firm other than Heise & Heise, LLP and indicated that the level of service he received from that firm was subpar by comparison. He emphasized that a person pursuing a short sale should build a strong and reliable team comprised of a lawyer, accountant, and real estate agent to assist in navigating the complexities and pitfalls inherent in a short sale.

This same person was able to get all negative references associated with the short sale removed from his credit file by continually appealing the references and demanding proof of the debt from the lender. After experiencing the lender’s inefficiencies throughout the short sale process this clever person figured out a way to capitalize on the lender’s dysfunction to his benefit.

Another former client wondered why anyone would just sit back and let their house be foreclosed upon and have that activity on their credit report rather than engaging in a short sale. One person expressed his opinion that he felt it was much easier to rehabilitate his overall financial situation by engaging in a short sale rather than declaring bankruptcy.  

One word we kept hearing from our former clients in these interviews was a relief, the relief they felt from the pressure of collection calls, relief from the uncertainty of what would happen to their future, and relief that with our assistance they were able to complete their short sale putting an unfortunate experience behind them.

If you are looking for a Baltimore real estate attorney or know anyone considering a short sale, contact us today. We look forward to helping our future clients achieve the same relief we provided to our former short sale real estate clients.


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