Benjaminday

Susan: If you begin the process with a lender to re-negotiate your loan or strike up some deal in lieu of foreclosure, they'll start asking you a lot of questions to see if they're actually get somewhere with the renegotiation. Among those are: why can't you afford the payments? What is your present income? What change in status has occurred that makes it difficult to afford the payments? Be prepared to answer those questions as accurately as possible. They may even ask if you are able to get another job, either switching from what you may presently have or adding another. Short-selling with a deficiency may be an option, but it may not be the best one. It still has a major economic impact to you personally. The first thing I would consider is this: what else do you own outright that you can sell? A TV? A car? A motorcycle? A boat? Many of these items are far more liquid and easier to sell than a $195,000 house. Another thought is to examine your budget, and if you don't have one, create one. Figuring out your annual expenses on and seeing what your monthly average is will help indicate other places where your money is going. MS Excel can be a great starting point and an easy to use piece of software to figure this out.

The bottomline: foreclosure is one of the most detrimental financial circumstances an individual can find themselves in. The ramifications will last for years and may lead to bankruptcy as well (which usually is not as damaging to creditors). Whatever you can do to defend the home is probably the best first option. Homes are selling in Colorado Springs, but demand is off almost 20% from the year before. Fountain Valley has a lot of inventory from $180,000 to $220,000 and not a lot of buying activity (although huge rental activity).

Don't give up, Susan. Don't let the foreclosure process begin, and don't be passive. It sounds like your statement "as of this month I can no longer afford my mortgage" means you are current and are looking with shame at a month when you can't make a payment. If that is true, you are already being extremely proactive by asking questions. Over 70% of those who go into foreclosure NEVER discuss things with their lender. You haven't missed a payment yet and are asking. That tells me that you probably have some decent options out there because you still have time. - Tue Oct 7 2008, 14:45

I would verify this heavily. In Colorado Springs, we have a Craigslist.org scam with individuals examining public records, creating bogus email addresses, indicating that they're eye surgeons performing Lasik in Africa, and requesting people send deposits and applications to them at an African address. The names are usually right or close to right, on a property I have listed they created an email that was really similar to my name as the return email. One piece of bait: the individuals performing this scam are usually offering the properties for well below market value rents.

Not to say that the property you are talking about is illegitimate, it just made my head spin when you wrote the question. Our problem in Colorado Springs is pretty widespread. - Mon Oct 6 2008, 13:24

I have an offer in on a property that is 23% below what is owed. I had a friend negotiate a short with the lender that was 21% light (that closed) and another friend who has one that should close (approved and past appraisal) that 34% light.

I think your metric is a good one, but it is totally a case-by-case basis. Some lenders (even 2nds) just refuse to budge, even though something really is better than the nothing they'll get if the first forecloses. When you write on a short-sale be prepared to not get the home, it is beyond your control (and to some degree beyond the seller's control). - Mon Aug 25 2008, 15:29