It is important for a homeowner to know all of the effects of a foreclosure or a short sale on various aspects of life, and for some people this means their security clearance. First of all, a security clearance is a status provided to certain individuals that enables them to have access to classified information. Certain jobs require a security clearance and these include positions where the individual works directly for the federal government or as federal contractors. 

It should be noted that a foreclosure will continue to be a public record that is available on the person’s credit history for at least 7 years. On the other hand, there is no particular item for a short sale on a credit history. As for security clearances, a foreclosure is likely to have detrimental effects for people who are in jobs that need a security clearance, such as those in the military, police officers, or the CIA. In some cases of foreclosure, the clearance can be canceled and the person may lose their job. However, a short sale should not have an impact on security clearances on its own. Thus, a short sale is not likely to cause a person to lose their job.

In fact, a short sale is viewed by many professionals much more favorably than a foreclosure because it shows they made an attempt to help their mortgage servicer and limit the losses. While in many cases a foreclosure is unavoidable, some may take it the borrower gave up on their responsibilities.

It should also be pointed out that even for people whose positions do not require a security clearance, a foreclosure may also be damaging. There are some employers out there who are entitled to regularly check the credit of employees who occupy sensitive positions in the company. In some cases, employers may terminate or reassign an employee who has undergone foreclosure.

For individuals in this position it would be very wise to first seek advice from your supervisor to get a clear of view of what will happen if this event takes place. It is always important to know what consequences (if any) lies ahead.

Moe Bedard
My name is Maurice "Moe" Bedard. I am the founder of America's #1 Mortgage Forum, LoanSafe.org. My online work has been featured in the New York Times, LA Times, Fox Business, and many other media publications.