Affect of Motorhome Shortsale on credit

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lmjennings

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Apr 3, 2013
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I short sold my motor home in 2010 (bought in 2006) with the lender's permission because I was out of work.  Fast  forward three years; I am trying to get a home loan and the lender of the motor home dinged my credit.  It shows a $0.00 due, but a balance of $7,300.00 dollars.  Is there a way to get this removed?
I did not know that it would indefinitely affect my credit, or I would have tried to get more for the motor home  (I actually had to pay part of the balance above what I sold the motor home for).  I know when you short sale a house that it can affect your credit for two years.  Is there any time limitations on the short sale of motor homes or will I have to live with this on my credit forever?  I forgot to mention that I live in California if anyone is familiar with my situation.
 
A repossession stays for 7 years. I'd guess a short sale would be the same.
 
There is no pre-defined effect on your credit - the loan information stays on file and the "effect" is whatever a prospective lender makes of it. Sometimes a short sale is marked "paid as agreed" and sometimes (as in your case) it still shows a balance. The time to negotiate the ending status of the loan was back at the time of the sale, so you are stuck with it now. It is, after all, a bad debt of some $7300  that your previous lender lost on the deal.

It will stay on file for as long as bad debt records are allowed,  probably seven years. Unlike home mortgages, there are few constraints on consumer credit items like vehicle and personal loans. You have the right to add a brief explanation to your credit records (do it at all three major credit bureaus) and you can send a letter of explanation about the short sale with your loan application, but I have little faith that a lender will pay any attention. Especially  these days, after the too-loose lending practices of the previous 10 years.
 
Gary,

Thankyou for your response to my question regarding the short sale of my motor home in 2010.  If I had known then what I know now I would have come up with a way to save it.  I was a builder for over 20 years and my work came to an almost virtual halt in 2007.  In 2011 with the help of my Aunt and Uncle I have work again buying, fixing, and selling houses.  I have learned a lot about home short sales and foreclosures in the last few years; now I have learned the hard way about short selling a vehicle.  Thanks again for your input.

Sincerely,
Lisa Jennings
 
Your situation is pretty common these days. Many RV owners were "under water" on their financing and got hurt bad when the economy went south.

Have you talked with any prospective lenders about the short sale? Somewhere there may be one that has room for that situation in their policies.
 
When you sign a contract to borrower money to purchase a RV, it is a personal contract that has nothing to do with the value of the collateral.  Normally a financial company requests a sufficient down payment and requires large enough payments to keep the collateral value higher than the amount of the debt.  In order to promote more RV sales, the finance company may have lowered the down payment requirements and extended the term (length) of the loan.  This result in the value of the collateral (your RV) can be less than the loan balance, especially if you have been slow on the payments.  The bottom line is that you promised to pay the loan in full.  Having the value of the collateral worth less than the balance of the loan is unfortunate, but you still owe the full debt. 

A credit report in most cases is a history of how you have handled your credit obligations over a period of time.  By short selling the RV loan and not paying the remaining balance, you are defaulting on your loan.  That shows other perspective lenders that you did not take care of your obligation in the past and they may not want to do business with you in the future.  If they do, more than likely they will charge you a higher interest rate.

History is history and cannot be changed.  Credit history is not different unless it is reported incorrectly.  It appears that there is not a mistake on your credit report.  You can help your report by looking up the lender that lost money on you and pay them in full and make sure they report that on your credit report.  That shows new lenders that you made a mistake but took responsibility and took care of it. 
 
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