How can I limit my losses on an upside down mortgage foreclosure/short sale, and protect any assets I still have?

Asked on May 21, 2012 under Real Estate Law, Wisconsin

Answers:

Jason Ostendorf / Law Ofice of Jason Ostendorf

Answered 8 years ago | Contributor

I have had to answer this question quite a few times since the economy went downhill in 2008.  Generally, foreclosure hurts your credit the most, while a deed in lieu or shortsale would hurt your credit substantially less.  A deed in lieu is probably better since short sale can be drawn out for years.  Additionally, with the deed in lieu or short sale, the mortgage company would agree not to seek any deficiency or unpaid balance from you on the mortgage after the transfer.  This would protect your assets.

Having said that, I cannot recommend enough that you speak with some foreclosure lawyers.  You would be surprised how many ways there often are to stop foreclosure, due to bank fraud, robo-signing, and other matters.  For instance, if you applied for a loan modification and were entitled to such a modification under a government program (like the Home Affordable Modification Program [HAMP]), then you may be able to stop the foreclosure, get a loan modification, and sue the bank.


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