This document compares the consequences of foreclosure versus a short sale. Foreclosure has more severe long-term impacts, including ineligibility for future Fannie Mae loans for 5-7 years, greater credit score drops of 250-300 points for over 3 years, permanent reporting on credit history, potential job loss, and deficiency judgments. A successful short sale allows eligibility for Fannie Mae loans after 2 years, credit score drops of 50 points for 12-18 months, no reporting on credit history, no impact on jobs, and possibly avoiding deficiency judgments. Overall, a short sale has fewer negative consequences than foreclosure.