Foreclosure may not be your only option if you are upside down or behind on your mortgage payments. Do you know that over 30% of all recent sales are Short Sales? Short Sales are getting easier and easier to do if you have the right people handle the short sale negotiations instead of trying to do it yourself.
Many local title companies have systems in place to handle all of the negotiations with the lenders / banks so that you do not have to deal with the lenders BS . Banks DO NOT WANT TO FORECLOSE on your property, once a bank forecloses on a property it can take 2-3 years before they are able to try and sell and the whole time they must maintain the property, pay taxes, have monthly checks on the property to make sure someone is not living there illegally once you as the homeowner moves out, they still need to have insurance on the property if its a house, townhome or condo in most cases, they must still pay monthly condo / hoa fees which year after year it all adds up to be a bigger loss in the end and oh lets not forget all of the attorneys fees to keep filing the paperwork.
Short Sales are always a better choice regardless if the bank wishes to 1099 you in the end, if you foreclose the bank / lender has every right to go after you down the road for the full amount including legal fees, and the full loss taken on the property. In most cases the bank may not go after you but its better to negotiate a short sale successfully and eliminate the what ifs in life and move on and work towards getting you and your family back on track financially and mentally stable.
Foreclosures will ruin your credit for a long time to come while a short sale is a much better solution to save the credit by not having that negative Foreclosure mark on your credit report for the next 7 years. I have seen many friends and clients credit scores who have sold their property by way of a short sale jump back up after the sale of the home even though on the credit report it shows that the mortgage / loan was sold for less than owed. Anytime you close an account or pay something off your credit score generally jumps up and raises your score which sure is much better than the other choice of being foreclosed.
Not everyone qualifies to sell their property as a short sale but in most cases you will qualify as long as you can show some form of hardship which in most cases about 70% of us are in some form of financial hardship over the last few years. A hardship generally means loss of income either from loss of overtime pay, loss of your previous job and you are unemployed, you recently had children and now your wife is no longer working her full time job and many other factors could make you qualify for a short sale.
A hardship letter is something you would send to the lender who your mortgage loan is being serviced by explaining why you should be allowed to sell your home at a loss and walk away. A hardship letter can be as simple as explaining that you no longer can afford to pay your mortgage because you loss your job, you are now on disability, you loss your spouses income because of death, you got divorced and your ex is no longer obligated to pay their portion and other factors.
The best thing to do is sit down and do your research online to see some examples of hardship letters so that you can write up something the bank will take .