My Mortgage is Impossible! What are My Choices?

"OMG! What am I going to do?" This is the question I was facing when I first decided I was in trouble. Maybe your in the same position. I owed more on the house than it was NOW worth. The quintessential upside down loan. So I looked at everything from lawyers to banks to real estate agents. Here are the options I found out there. Some of them might be right for you . . . . .

1. Keep on paying and don't change a thing: The success of this method really depends on the terms of loan you have now. If you can hack it for the long term, it is something to consider. However you realize, you don't know when the market will bounce back. In other words, if your house has lost considerable value, who knows when the value will return to at least the price YOU bought it for, let alone the inflated value of "the good old days." All the experts say, "you can't time the market." I guess its true, especially if they themselves were burned as well.
2. Try to renegotiate your loan with the bank: I've done this successfully. It's a good step if your home hasn't depreciated over $100,000. You just call up the bank, and as for the "loss mitigation department." You tell them your having a hard time, and they will send you a hardship package to fill out. You fill it out, looking as financially desperate as possible, and they will come back to you with a modified loan.

3. Short Sale: You could call this a pre-foreclosure sale. Your late on a few payments, and the bank takes a serious look at you and threatens foreclosure. You find a realtor to represent you and present the hardship package. The realtor prices the home at a substantial discount and finds a buyer. she presents the offer to the bank, and the bank usually accepts the deal, which is a win-win for everyone. The bank is always interested in short sale instead of foreclosure as it saves them 10s of thousands of dollars in hassle and legal fees, and allow both parties to move on to new business. You should remember that there are still negative ramifications for short sales, even if less damaging than those associated with foreclosures and/or bankruptcy. However, short sales do carry less negative effects than foreclosures. Short sale sellers are widely seen as less risky than foreclosed sellers. Case in point, Fannie Mae recently adjusted their guidelines to dictate only a two year waiting period for a short sale seller to buy another primary residence, while they extended the waiting period for foreclosures to five years.

4. Deed in Lieu of Foreclosure: This is the second to the last option, and the bank hates this one. It's where you simply say, "Here's the deed to my house, and I'm walking away." The bank then has to sell the house to recover its losses. The lender forgives the borrower's note as "paid" and provides the the borrower with 2 documents:
* One which states that the debt is fully canceled
* One that waives of the right to a deficiency judgment (the lender's right to ask for the unpaid debt amount if it is not recovered totally by the property-sale)

5. Foreclosure: This is the final option and if you like to go to court, then this is the option for you. In foreclosure, the lender first sends you a summons to appear or foreclosure complaint. The borrower responds to prevent foreclosure and explains the problems at a hearing. The borrower can this point you can still pay the full amount and get the house back during this redemption period. After the redemption period is over, the lender sells the property a public sale or auction and getting as much as they can (or settle for). Any excess goes to you, the original owner/borrower. If the sale amount is less than the loan amount, and in your case it probably will be, you will still owe the balance to the lender. This amount is determined as a result of deficiency proceedings.So as you can see, as we go down the line, the options get worse and worse! As far as my situation, I have to walk away from at least 3 house. I'm losing a hell of a lot of money, but I'm getting my life back. Make sure and check back and follow along with my story at HouseShortSale.org