First I would try to refinace. If you are upside down then try to get a loan modification, I know Freemont is doing a lot of these to avoid having to foreclose on properties at 5%, and just Writing off the losses.
If you have the buyer for the Short Sale call your current mortgage company and tell them you have a buyer, and you are going to give the keys back to them but do not want to go through a foreclosure. Tell them that you are going to do a chapter 13 bankruptcy and basically extend the foreclosure as long as possible if they do not do the short sale. You have 5 months for an uncontested foreclosure before the Sherriff in Broward County kicks you out. Let the manager or decision maker know that it is going to take a long time to get you out of the property. You can extend a foreclosure for a year as long as you do not have a summary judgement against the house yet, with a decent attorney. So you could basically you could not pay your mortgage taxes and insurance for 17 months (you would have to pay the lawyer). So for 17 months the mortgage company is not going to recoup the mortgage payment, say it is $1,500.00 plus $500 for taxes and insurance to $2,000 X 17 = $34,000.00 they are never going to collect not to mention their attorney fees to do the foreclosure $5,000.00 and the 9 months the house is going to sit on the market for $18,000. Tell them one of the neighbors is a conviced felon also, so the house is going to sit on the market longer and you are going to take every last little thing in your house (I have seen houses that they take the fans, appliances etc.) so the bank is going to get even less than they normally would. So your current mortgage holder knows that you are going to extend it for as long as possible, and they are going to loose 34,000+ 5000+18000= $57,000.00. Tell them you have the buyer if the buyer does not have financing have them call me Todd Chang http://www.HouseLendersInc.com/ 786.556.8633 to get pre approved for a mortgage loan. You definitely need to get to the decision maker though.
Also the laws changed so you say you bought it 18 months ago for $200,000 did 97% financing and owe $194,000 on it lets say it is now worth appraised value $150,000 and they do they do the short sale at $120,000.00 then last year you would have had to pay capital gains taxes on $80,000.00. This year they changed it so you do not have to pay taxes on it.
You can contact your mortgage company and request a short sale package. They will most like send it to your attorney unless you are "PRO-SE" (means you represent yourself) because if you are in an active bankruptcy, it is against the law for a creditor to contact you; unless you or your attorney has provided written authorization to the creditor to contact you.
Thanks so much for your question. Unfortunately, we are seeing more and more people in a similar situation. Although you should be concerned about your situation, THERE IS HOPE!
Withouth futher qualification though, I don't think that your question has a quick answer. We are Certified Distressed Property Experts (CDPE), and have gone through extensive training that allows us to effectively help people in your situation.
I'm not sure where in Florida you are, however, if you'd like to get into detail about your particular situation, please don't hesitate to call us at 561-948-1591. If we can simply give you some guidance over the phone, we will do so. If you qualify for a short sale, and are in our area, we would be happy to help. If you're not in our area, then we can put you in touch with another CDPE who can help.
As we said, there is hope, so don't do something drastic like move out in the middle of the night (which we're seeing people do more and more often). Just "letting the bank take it back" is usually not the answer. We may possibly be able to negotiate with the bank for a loan modification, or as you suggest, negotiate a short sale. There are other options too. A foreclosure is nearly impossible to recover from, if you ever plan on financing ANYTHING again (house, car, furniture, etc.).
Please, give us a call. We'd be more than happy to see if we can offer some help.
Robin Landis, Realtor
ERA Dennis Realty