Why do a short sale?
If life has thrown you a curve ball and put you in the position of losing your house, the last thing you need is someone blowing smoke at you. What you need now is someone who can help you find your best way out of this tough situation.
Foreclosure is not the best way out. Walking away from your home is not the best way out. Those options may only make life worse for you. A short sale may be your best option.
Let’s get this straight, too -
What about a loan modification?
The lenders have seen a high rate of eventual delinquencies and foreclosures on loans that they have modified. Some of that is likely their own fault, based on the way that they did the early loan modifications. The banks that took Federal TARP money are obligated to at least offer this option, but they are not enthusiastic about the program and most would prefer a short sale. The government has revamped this program for 2012 to make it more attractive to the lenders; so, you should ask your lender if they have a Home Affordable Modification Program (now called HAMP2) that might work for you. Click here to go to the official government site to read about this program.
Why not do a deed in lieu?
The deed in lieu option, in which you hand the property deed over to the bank as
payment for your mortgage obligation, has come back into favor with some banks; but
there is still no guarantee that they will not pursue the shortfall on the original
mortgage loan. This is still a better option than foreclosure and you should see
if your lender will consider it. Click here for a HUD article on the deed-
What about declaring bankruptcy?
While bankruptcy may indeed protect you from collection efforts by the bank, it is also the most damaging to your credit history and takes the longest to recover from. Click here for an interesting article comparing those two options. For the view of the same question as written from a lenders point of view click here.
Click here for an interesting blog post by a short sale lawyer after his meeting with top Bank of America officials at a short sale summit in 2012.
OK, I get it. How can you help?