Will Short Sale Shoot FICO Senseless?

What is the risk to your credit if a short sale enters the picture?

QUESTION: Steve owns a home in Florida, but moved back to Atlanta. Their lender will accept a short-sale and they have $20,000 in debt. How will a short-sale affect his credit?

ANSWER: It will damage it, but not nearly as much as a foreclosure or bankruptcy or not paying on it for 2 years. It will only affect it if they report it. It will affect your FICO score, but I don’t care about that. If you want a mortgage and it affects your FICO, you’ll just have to go to a place that does manual underwriting.