However. Your lender has to agree to a short-sale. You may have to provide some pretty solid and compelling evidence that you are and will be unable to make payments, that your property is in need of repairs you are unable to afford, that you are impacted due to a distressed housing and/or employment market. In "short", you will need a good reason as to why the the lender should agree to your short sale.
Because a foreclosure can be an expensive legal process for lenders, they may be willing to work with you; but again, you will have to make your case.
Another issue to worry about in a short sale (and with a foreclosure, too) is the possible impact the forgiven debt can have on your income tax. Forgiven debt can be considered income and can thus create tax implications. Your lender will issue a 1099 for the forgiven portion, so it will be recorded. That would be the last thing you need when you are already in financial straits, so be sure you understand the terms of your mortgage and talk to a financial adviser before proceeding with either avenue.
Best of luck to you.
My client had a series of misfortunes that lead to this and I think we're doing the right thing by pursuing it.
Good luck with your situation!
I've dealt with Wachovia many many times, either the dealer tattoo'd the paper work, which I doubt ... or... as usual, the BK follows the charge-off by 6 to 15 months because the courts are backed up - the best is yet to come..l.o.l..
Hmm, interesting: "I can help you buy a home with no money down and no new bank financing completely legal and safe" --- Member since 01/29/08
"Realtors(R) Applaud House Passage of Mortgage Cancellation Tax Relief
The National Association of Realtors(R) praised the U.S. House of Representatives for today's passage of the Mortgage Cancellation Tax Relief Act, H.R. 3648, by a vote of 386 to 27. Since the early 1990s, NAR has advocated for repeal of the current law, which forces individuals to pay an income tax when they have had a loan forgiven or have had to foreclose because of their inability to pay their mortgage.
"Congress made a good decision today that will affect many Americans who find themselves in a truly bad situation," said NAR President Pat V. Combs
"Realtors(R) are about building communities, not just selling homes. We must work together to prevent the dream of homeownership from becoming a nightmare," said Combs. "This is just one step that will help families get on with their lives and begin rebuilding their economic security."
So it appears a loan forgiveness from a short sale isn't taxab;e income and might actually be a write off. Talk to your CPA today!
The biggest negative of a foreclosure is the deeper damage and longer period of time the damage stays on your credit record.
Which is worse: foreclosure or bankruptcy?
Based on our mail, the financial squeeze that's left millions of Americans falling behind on their mortgage payments doesn't seem to be letting up. For some, that presents a stark choice: is it better to lose your house to foreclosure or file for bankruptcy protection?. The Answer Desk, by msnbc.com's John W. Schoen
Sara Mehrpouyan CDPE
Direct Phone: 818-903-2040
There is a nice table here that shows some of the differences.
Still, it does not mean that all future oppty is lost. You will need to rebuild your credit by showing on time payments. You might need to meet more stringent guidelines to buy another property, but that prospect is not vanished.......not at all. You might pay a higher rate, and as result have reduced purchasing power. After a year of on time payments, you can refi if that is to your advantage.
I am thinking about buying a short sale off a friend of mine who is in trouble. I'm worried about over paying, work that needs doing on the house that has been empty and neglected, and paying any unknown to me creditors later or at settlement.