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

UPDATED: May 21, 2012

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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


Jason Ostendorf / Law Ofice of Jason Ostendorf

Answered 10 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.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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