If a Florida homeowner stops making their mortgage payments, it can have a huge effect on their credit ratings and future access to new credit. While very complicated, here is a high level overview of some credit ramifications of not paying your mortgage:


Foreclosure is the legal process where the secured creditor or bank repossesses the real estate property in order to sell due to non-payment. The completion of the foreclosure process allows the lender to sell the property and apply the proceeds to their total amounts due.

A foreclosure will drop a credit score up to 250 points and remain on a credit report for seven (7) years from completion date.

Deed in Lieu of Foreclosure

Under this scenario, the borrower turns the house over to the lender and walks away without owing anything.  Sound good? Well it’s not that easy… the lender has to agree too! The lender usually will not proceed if the outstanding debt on the Florida property exceeds the current market value. In this current market of deflated values, this option is rare.

A deed in lieu of foreclosure will generally drop a credit score up to 150 points and remain on the credit report for seven (7) years from completion date just like a regular foreclosure.

Short Sale

A short sale occurs when the mortgage lender agrees to discount the loan balance, due to a documented hardship (see our Short Sale section on our website for a more in-depth explanation.) A short sale is typically used to prevent a foreclosure and will not affect your credit score as bad as a foreclosure. It is advisable to negotiate your credit reporting with the lender as part of the short sale agreement.

A short sale will typically show a credit report as a “Paid Settlement” with a 50—150 point drop. It too stays on the credit report for seven (7) years.


This is a very complicated financial and legal option and best to avoid at all costs. Our Orlando title insurance company has strong and reliable credit management and attorney referrals if you think you need to review this option.

A Chapter 7 bankruptcy will remain on the credit report for ten (10) years and a Chapter 13 will remain for seven (7). The point loss could be from 100-350 points.

None of the options above should be pursued without reliable financial and legal guidance as to all your options and the financial ramifications. Our title insurance and escrow closing services team here at RECS have knowledgeable and reliable attorney and credit repair referrals. Please contact us today by calling 407-615-8550.

If you are interested in buying, selling, or financing real estate in Orlando, check out our extensive consumer education material on our website at www.recsfl.com – it is FREE! Then, give our Orlando title insurance company a call with your questions. We are ready to help you through the entire Florida real estate transaction process and can direct you to reliable, proven and honest Orlando real estate professionals. Give us a call at 407-615-8550 today!