Although Jeff has a point, your second may not be protected from the anti-deficiency statues. Hence, the http://www.makinghomesafordable.gov website and contacting your lenders. The anti deficiancy statues on second loans has not been tested in the Arizona court system. If you need a good attorney to talk to, I would be happy to provide you with names of a few that are specializing in short sales/foreclosures. Most will give you some time free so at least you know your options. Every person's situation is different so legal and tax advice are always prudent before making a move other than speaking to your lenders, first.
You have received a lot of information here but actually what I see you needing is answers to your questions and someone to just take the pressure off you, This is what we do in our group as there are many different answers to the short sale question. You may or may not sell your home but you need to try to protect yourself as best you can. You need to take the emotion out of it and get the help you need.
We would be happy to help you and try to take the unknowing pressure off you.
Take Care, Thanks, Brenda
I am sorry to hear about your situation.
If you do a short sale and your home is only worth 1/3 of the purchase price, yes you will lose your 20 percent investment.
However, you will not have to pay the full loan off either for the $100,000 that you are under water. Arizona statutes make us a non-deficiency state, where the lender is prohibited for pursuing the shorted loan deficienc after the short sale. You can walk on from this situation and start rebuilding your credit. Usually a lender will require you to wait about 2-3 years before you can re-apply for a new loan.
Sounds like you know about the benefits and drawbacks of a short sale. Each person is different and difficult to answer your questions with limited knowledge.
However, as a start read the "Short Sale Advisory" published by the Arizona Department of Real Estate. This will answer all of your questions. This and other information can be found on my website http://www.arizonahomesland.com/forsellersorlandlords.html or from the Arizona Department of Real Estate.
Jeff Masich, Realtor
Arizona Homes and Land
Have you spoken with your lenders and have you taken a look at the website http://www.makinghomesaffordable.gov? it is a program for people specifically like you who need some relief. If you qualify for a short sale, under the program, depending on who backs your loan, you could be relieved of all future liability.
Start by watching the introductory video and answr the questions about whether or not you will qualify for loan modification or short sale. If you don't qualify according to the questonaire on line, call your lenders anyway. I have several clients whose lenders are participating in the program but according to the questionaire did not qualify. If you do, you may be able to short sell and be relieved of any tax liability. BUT, you must talk to your lenders and determine whether or not you will be taxed on the deficiency if you short sell. If you need some assitance, I'd be happy to talk to you and walk you through the process to get started.