Two mortgages and foreclosure?
If you allow your home to be foreclosed or if you sign a
Deed-in-Lieu of Foreclosure. Home owners will take a hit of about
250 points on their FICO score. This means if a their FICO score
before foreclosure was 680, it could dip as low as 430. A home
owner who wants to buy another home after foreclosure will end up
waiting about 24 months before a lender will offer any kind of
interest rate that makes sense. During that time you must have a
near perfect credit.
The affect of a short sale on a home owner's credit report is
much less damaging. The negative on credit may show up as a
pre-foreclosure in redemption status, which will result in a loss
of around 80 points from the FICO score. It can also simply show up
as the loan was paid off and not affect your score at all. This
means a short sale with a previous FICO of 680 could possibly see
it fall to around 600 or it could remain the same.
There are actually companies that will work with you for free to
buy your mortgage away from your mortgage company and avoid your
foreclosure. I would advise looking into this first.