The way I see it is this. You are upside down in this property no matter what you do. The question is can you afford to make the payments? If you just cannot then you have options open to you......if you can then you have options open to you (just bring your checkbook). The FIRST thing you need to do is contact your lender and see what options they will give you. They may work with you, they may not. Until you call you will never know. If you have a hardship (they will decide) then make your calls based on that. You really need to talk to a lawyer who deals in this area so that you get good information. It will cost you a couple of hundred bucks but it will be the best money you ever spent. Do yourself a favor and go to people who can help you, you dont need assumptions and you dont need guesses.

Hello Rae,

A short sale seems to be your best option, based on what you've said above. Your credit will be affected by either a short sale or foreclosure, however, a short sale will have maybe two years' effect, vs. a foreclosure at 5-7 years. Assuming that the Condo Assn lien is legitimate, if the bank forecloses on the property, it becomes their problem, if they choose to sell it. Nobody in their right mind would buy the condo with clouds such as this on title. Same goes for the HOA dues that are owed. When it all boils down to it, the lender is going to have decide between the short sale offer, and what they feel they can get for it on the open market, should they choose to take it back through a foreclosure.

All of this assumes that you have a verifiable hardship (losing your job is a hardship, as long as you can prove it). If you don't have a hardship, you cannot proceed with a short sale,and either foreclosure or BK are your options. To learn more about the whole process, feel free to visit our website at http://www.foreclosureuturn.com . If you have any further questions, feel free to call me anytime. We are CDPE's(Certified Distressed Property Experts), and specialize in dealing with distressed properties, so I'm sure one of us can help you out.

Good Luck,
Bob Hertzog
Summit Home Consultants

Hi there, Rae! You should definitely try to work something out for a short sale with your two lenders. A short sale can sometimes be accomplished without hurting your credit. A foreclosure will stay on your credit report forever, even though you can get a new mortgage seven years later if you don't have any more blots on your credit report. There are many realtors who specialize in short sales. That won't help your situation with the HOA though. You should begin negotiations now to try to save your credit.