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I recently attended this webinar:

How to Get Short Sales and Foreclosures Removed from a Credit Report

It doesn’t matter if a short sale/foreclosure is removed from a prospective buyer’s credit report! Derogatory credit must still season according to Fannie/Freddie guidelines.

There’s a question in the “Declarations” section of an application: “Have you had property foreclosed upon [a short sale is considered pre-foreclosure] or given title or deed in lieu thereof in the last 7 years?”

Even if an applicant answers “no,” their last property address will be checked to see if it was foreclosed upon and, if the applicant lied, they’re subject to the penalty of perjury as cited in the “Acknowledgement and Agreement” section of the application.

Each of the undersigned specifically represents to Lender and to Lender's actual or potential agents, brokers, processors, attorneys, insurers, servicers, successors and assigns and agrees and acknowledges that: (1) the information provided in this application is true and correct as of the date set forth opposite my signature and that any intentional or negligent misrepresentation of this information contained in this application may result in civil liability, including monetary damages, to any person who may suffer any loss due to reliance upon any misrepresentation that I have made on this application, and/or in criminal penalties including, but not limited to, fine or imprisonment or both under the provisions of Title 18, United States Code, Sec. 1001, et seq.;

Even if a negative short sale or foreclosure is successfully removed, I would never counsel a consumer to lie on a loan application. The lender will find out, anyway--guaranteed. Checking the status of the applicant’s prior address(es) is part of the lender’s file audit checklist.
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