this is not "Legal Advice" However I do work for an attorney and Im a Legal Assistant/Realtor.
A couple of things to consider:
1: Have you tried to modify your loan? Your loan will not qualify for the HAMP program but may qualify for an "IN House" modification.
Depending on who your lender/investor is the may be happy to modify your home and reduce the interest rate and possibly the principal balance depending on the situation.
2: A short sale would be your next best bet if you do not qualify for a modification. There are all kinds of investors/ home buyers who would be happy to buy from you at the current market value, of course depending on the condition of the home.
3: A foreclosure or giving the home back to lender will be the worst scenario on your credit. Also, with the 2nd loan the lender may be able to go after you in a collection situation, forcing you into bankruptcy or paying the loan amount.
You may have alternatives. Doing a loan mod will be the least damaging to your credit.
I did a loan mod on a first and second as well as settled about 5 credit cards for a client. It is less than a year later and his credit score is 640... Way better than a foreclosure or bankruptcy..
Best of luck. Be proactice. the lenders do modify loans but for the most part what I have seen is homeowners submitting incomplete paper work. Or the financials are way out of reality.
Volo law Group Legal Realty
925 699 5041
Seek a legal and tax consultation. This situation is fraught with liability and must be handled in a way that prevents doing more financial damage to you down the road. (Imagine the banks suing you for any and all losses incurred on account of letting the property go.)
Unfortunately, you did not provide enough information in your question for anyone to be able to go over reasonable options with you. Please give me a call at 424-2HELP12 (424.243.5712) and I can ask a few questions and help point you in the right direction. Do not wait too long. Having complete information about your options and sufficient time to make an informed decision is very important. Call me today. Dare to Dream.
Shel-lee Davis, QSCÂ®
Certified Distressed Property Expert â€“ CDPEÂ®
Short Sale & Foreclosure Resource â€“ SFRÂ®
Certified HAFA Specialist â€“ CHSÂ®
Your Real Estate Consultant for Life
RE/MAX Palos Verdes Realty
There are some serious implications to taking such measures......Our advice to people finding themselves in financial distress is to consider all options prior to making a final decision. Throwing in th towel in frustration can be a mistake for some.
Meeting with an attorney that specializes in real estate may provide you with options otherwise not appreciated that could be better options for you.
Our recommendation is to collect as much information as possible before making a commitment.
Please see my blog on how short sales work and how to get them approved
Expect to have your credit seriously damaged as a result of this for at least a couple of years possibly longer.
Good Luck, I hope things turn out OK.
I think your best bet would be to call a local realtor and try to arrange for a short sale. Generally speaking , you will need to document to the banks why you are no longer able to make your mortgage payments. The 2nd mortgagor may ask you to assume a non secured loan to partially pay them back. You can also request a deed in lieu of foreclosure or file for bankruptcy, but I believe the best of bad options might be the short sale route. It would also be a good idea to consult an attorney.