One of the most frequent questions I hear involves a contemplated short sale
where only one spouse is on the loan and the couple is worried about how the other spouses credit will be affected.
Common concerns are:
Thankfully the answer to all of the above is NO.
- Will both spouses income be considered during the short sale?
- Will the other spouse will suffer credit damage as a result of the short sale?
- Will the other spouse be denied for a new mortgage due to the others short sale?
If only one spouse is named on the mortgage, the other is neither responsible for it, or affected by a short sale of the mortgaged property. Having negotiated with hundreds of lienholders – I have never once been asked to provide income documentation for someone not named on the mortgage, nor have I seen negative credit reporting (for the non-short-selling spouse) as a result of a short sale. Furthermore, although I am not a lender and do not set lending guidelines, I have seen many instances of one spouse short selling a property, only to have the other spouse turn around and purchase a new property at the same time, or shortly thereafter.