Other factors -- such as court judgments -- associated with mortgage solutions also can negatively affect a borrower's credit score.
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For example, in some foreclosures and short sales, a lender may obtain a deficiency judgment against a homeowner. A deficiency judgment obtained by a creditor in court can be used to force borrowers to pay the difference between the amount of money collected in a short sale -- or a sale after a foreclosure -- and the outstanding balance of the mortgage.
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"People think they don't want to do a short sale because they may owe money later, but they need to understand that (a deficiency judgment) could be an issue with a foreclosure, too," says Olsen.