I would check with your lender if you havnt allready for a loan modification! If they wont consider that see what your options are for a short sale or preforclosure.

Another question is are you late at all on any payments? That will determine your next steps!

Lucinda Tkach
Windermere
lucindat@windermere.com

I'm not a CPA and don't know how your loan is structured, so I don't know if the amount forgiven in a short sale would be counted as taxable income. Due to relatively recent changes in the law, and the fact that Arizona is a no recourse state, *usually* the amount forgiven in a short sale is not considered taxable income. But you should consult a tax professional. They may have other options to prevent the forgiven amount from being taxable.

A loan mod, a short sale, a deed in lieu or a foreclosure appear to be your only options. The latter three will hammer your credit.

Call your lenders and see if you can work out a loan modification program. You could short sale your home, but the amont forgiven will be counted as taxable income.