Foreclosure, short sale, or Deed in Lieu of Foreclosure
I would like to receive some advise on the above three options in
terms of which is least consequential to my credit rating. I am
trying to sell a vacant house through a realtor and am having no
success. The market appears to be completely dry so I am forced to
look into all of my options. I am going deeper into credit card debt
in order to make the 1st and 2nd mortgage payments and will no be able
to continue to do this in 2 or 3 months from now due to maxing out all
of my cards. I have also lowered my asking price on my house so that
I will not have to bring money to closing (if I do get a sales
contract).
I would like to know how to handle the first and second mortgage
holder into coordinating their assumption of my property with minimal
consequences to me.
Actually going thru foreclosure would be the worst.
What you're trying now, selling the property on the open market at a
"fire sale" lowered price, is (I think) what you mean by "short sale"
and would have no adverse effect on your credit rating, if you
succeed. Of course, if you hold out for a (relatively speaking) high
price so long that you max out your other credit to pay the mortgages
and are then unable to keep up all your payments, that will hurt your
credit. You may consider lowering your price still further, until
buyers pop out of the woodwork.
But you already knew that. And if you don't get any nibbles from
marketing your property, it would then make sense to approach the
mortgage holders about accepting a deed in lieu of foreclosure, as a
simpler and cheaper and less-harmful-to-your-credit way of
accomplishing the same thing as foreclosure, which is your last (and
least favorable) option.
Of course, you want to be in personal contact with your mortgagees
(talking to a live person, not just paying your bills) for at least a
few months before that so they know what is going on, and can
anticipate that you are doing your best to sell the house, and can
maybe even help you out of the jam in one way or another. They
usually don't like to foreclose, either; it's messy and expensive.
Sounds like you're already trying to do things in the right order.
But if in doubt, you ought to consult an actual local lawyer (and real
estate broker) familiar with the laws of your jurisdiction (you don't
say where you or the property are located).