The big question is “Should I short sale, let my property foreclose or maybe even file bankruptcy?” If you are pondering whether to apply for a loan modification, agree to a short sale or just let the property go into foreclosure, PLEASE READ THIS.
Remember you are not alone. Hundreds of thousands of people were victims of the Real Estate bubble. Some have already resolved their problem but others were either paralyzed by the fear of losing their home, tried options that did not work, or just did not want to deal with it. As this crisis has “matured” there is more assistance than when it first erupted. First speak with your attorney and accountant. They will be able to give you the advice you need for your particular situation. This is an important decision and one that needs to be made for peace of mind, if for no other reason.
What’s the Easiest Solution?
I can tell you from experience that there is no precedence for the upheaval the market has seen. Having experienced working with properties in foreclosure, I have found that the best solution by far is a short sale. If you know of ANYONE who has been successful with a loan modification that had favorable terms in the long run for the owner, call me. It would be a first. If you or someone you know has paid hundreds of dollars to find out that a loan modification was either not feasible or was rejected, do not call me. Sadly, I already know too many people who have been taken for the loan mod ride. The lack of results is shameful.
Which is The “Least Worse” Option?
For most owners, a short sale is preferable to a foreclosure. Although both can negatively impact your credit score; in a short sale, the owner made the effort to do the right thing. Future loans may depend on this effort. Banks are unwilling to negotiate deficiency judgments with the homeowner after a foreclosure. A foreclosure does not indicate “best effort” to better the situation for homeowner and lender.
So… Should I Short Sale?
Walking away from a property does not instill trust in a future lender. Foreclosures can not only hurt the future loan worthiness of the defaulting homeowner but also is bad for the neighborhood. If embarrassment enters into your decision, you can short sale your home without broadcasting it with yard signs and lockboxes. It can be a completely confidential transaction.