Short sale is a decision that home owner makes after evaluation their need and financial condition but it needs lender's approval. There is no underlined guidelines for short sale and it's approval depends solely on lender's wish and risk re-assessment. It has got nothing to do with HAMP or HARP refinance. It makes no difference at all. If you wish to leave the house and make no mortgage Payment lender cannot levy your pay checks but they have all rights to report behind payment to credit credit bureau which will lower down your credit score and hence lower the ability buy a new home.Moreover, if you wish to leave the house and leave no option for lender other then short sale, they will report short to bureau which will lead to inability to buy new home for at least 3 years. At the same time lender will report their loss to IRS and you will have to pay taxes for the amount of lender's loss as it will be counted as your income for that particular year.
Short sale is very important decision to make as it has it's own consequences. If you have good understanding with the lender and if you could convince them to approve the loan and do a better than fair credit reporting , your credit will not be hampered a great deal.... more