SCRA Protection – HAFA / short sale and negative impact of credit report

Compliance > Lending > Service Members > SCRA
Q: Is there any guidance so that HAFA/short sales will not negatively affect the credit reports of military members?
 
A:  Unfortunately, the Treasury cannot control the way credit is reported or used by the consumer agencies. Any short sale will have some negative impact because it indicates that the borrower could not repay the entire debt. However, the impact is much less if the borrower is current at the time of the short sale, so the Treasury has encouraged borrowers to stay current on the loan until the HAFA transaction closes.
 
 
ADDITIONAL INFORMATION – This Q&A was released by the Federal Reserve Board, in follow up to their Servicemember Financial Protection Webinar that was presented on September 10, 2012 - https://www.consumercomplianceoutlook.org/2013/first-quarter/servicemember-financial-protection-webinar/
 

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