James Flanagan

There have been some great answers on this site. All are correct really. You shoud try exhausting all you options of course and you should speak with a compitent attorney. My answer is under the assumption that all your options and resources have already been tapped. If then you find there is nothing that can be done, then you go with the short sale only to protect your credit from foreclosure. In the short sale package it should clearly state that the reports to the credit agencies should be stated in a certain fashion to minimize the impact on your credit. Also, the Mortgage Forgivenss Debt Relief Act of 2007 was established to help lenders recouperate any money or make you claim the money saved due to the short sale. This bill was vetoed by Bush in December of 2007. Other than the negative impact on credit there will be no other remifications. All fees to do a short sale should be paid by the bank. Short sales are a little tricky, so please get compitent advice before agreeing to one. Again try to exhaust all of your resources before turning to a short sale, but keep it in your mind as an option or you may run out of time before your realize that a short sale is the only option. Good luck to you and your family. I hope some of this was helpful. - Fri Jul 25 2008, 10:48

I am really sorry to hear about your situation. I think I can shed a little light on the subject. I help people who are exactly in your situation. I am not a realtor, nor an attorney. It is partially true that they can not help you until you are 90 days past due. Most banks tell you this to try to get as much money out of you before they actually foreclose. There are many things that can go awry when trying to short sale. The bank requires you to make sure all the paperwork is in good working order. Over there years of doing this I find that if you do not submit a fully completed short sale package, they more often than not disregard the package. What I find that what usually happens when you give someone authorization to speak with the bank on your behalf, they usually have trouble putting together a short sale package. Due to the time sensitivity of foreclosure, they usually do not have enough time to put everything together and find a buyer before the foreclosure sale. The bad thing in this is that anytime this happens and good people are put in the position you are in, their credit is damaged no matter what unless you can reinstate the loan. Reinstating the loan is catching up to all missed payments and any penalties or fees. If this is done the next time you can do this is in 5 years. The good thing about a short sale is that your credit can be repaired in as little as a year, whereas if you were foreclosed on, it would stay on your record for 12 years. The reason why you can repair your credit so fast is because the loan on the house will show a status of settlement. It is a huge upgrade over the foreclosure status. The incentive for a bank to accept a short sale and agree to take less for your house is because the effects of them repossessing the house greatly affect the amount of money they can lend. For example, let’s say a house is going to be repossessed, and this house is worth $200,000 in market value. The bank must withhold 16 times the price of the house. Due to federal regulations you must hold back funds for every house you have on record as repossessions. Meaning this $200,000 house is forcing the bank to withhold $3,200,000 from their lending funds. So by having this house on their records they can not lend this money to anyone until the house is off of their books. That is 3.2 million dollars that they can't lend and can't collect any interest. Please if you have any more questions or you would like my help please give me a call at (224) 875-0330, my name is Reggie. - Fri Jul 25 2008, 10:27