IÂ was approached by my previous clients that was seeking an answer in regards to their housing dilemma. And as I listen to all their complaints, there are 3 things that always pops out in the conversation. One, "should we just walk away? why pay this mortgage, my house don't have any value." Second, "Can you short sale my house.. I want to buy the house on the corner, it's $300k cheaper than my house." And, the third, "Can we just seek loan modification, at least they can lower my payments."
Each person has their own personal opinion, I guess what ever I tell them, or suggest to them, they will still follow what makes them comfortable. However, we as the professional should educate and guide them, it's our responsibility one way or the other, so I will give you my 5 cents on this matter.
Walk Away - well if you think that walking away from your mortgage is the right thing, we'll your wrong!!!! When you signedÂ that loan documents, it is a valid contract between you and the bank that you will be responsible for paying interest on the loan you have acquired. And if your house has equity, I think you will not be complaining about paying your mortgage. Just like when you purchase your brand new car, you know that as soon as you leave that dealer, your car has already depreciated, but you still keep on paying. I know, mortgage is higher, but if you really can't afford it, then short sale the property or do a Loan Modification, talk to your lender.
Short-Sale - This is the best thing that any homeowner can do if you can't keep up with your payments anymore. However, I know a lot of homeowners that are trying to go around the system, they are involving their relatives to purchase their home as short sale and they will rent back to them, this is a neat idea but be careful, you can't repurchased that home again, because by the time you will repurchase this, the lender won't allow it, can you see, from you, then your brother(ex), then back to you again? Well, that is fraud, that's all I can say about that. And always remember, short sale approval from the bank depends on your hardship, so make sure that you have a true and valid hardship.
Loan Modification - Banks are entertaining modification, as much as possible they don't want you to go to foreclosure because it's expensive. However, if you think that missing your payments in purpose so you can avail modification, you are wrong. The Banks are now requiring you to pay for the missed payments that you have accumulated before they even offer you any repayment plan. So, the best way is really talk to your banks and that if you have a good reason for them to modify your loan and you to be persistent in getting one, I believed that they will give it to you. Also, I'm not discrediting the Attorneys' and company that offers Loan Modification, but any homeowner can do their own modification as long as they're patient and persistent... always remember, you are not the only one that are calling for a modification.
So, you may or may not agree with me on all I have said, this is just my opinion on all this matter, do what is right for you and always seek advice not only to one or two professional but go out there and research. I'm only here to provide you knowledge and advice, you still know what is best for you.