2 mortgage pmts missed, no job, loan>value. so..short sale now or stay in home for free until foreclosure?

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Close family member is in trouble and needs help. Since she is only 2 months behing now and has no job, no money and bad credit, would it make any sense to stay in the home until foreclosure.. instead of negotiating a short sale now?…to save on future rent after short sale goes through?
Right now she is considering negotiating short sale, but that could mean sale/closing in 2-3 months, and then she has to be out and find a rental…and still may be unemployed.

I’m just trying to figure out how long she can stay in the property with short sale vs foreclosure….and weigh the credit consequences of each.

And negotiating with lender for loan modification won’t help. She has no job or money.

  1. Reply
    May 3, 2011 at 3:35 am

    We were in the same position. We did a short sale. Short sale stays on your credit report for only 2 years, a foreclosure stays on for 7. If they do a foreclosure its better to just file for bankruptcy. Both are 7 years, (well, here in CA its 10 years for bankruptcy now) You can still live in your house for free until you sell it. If you dont sell it it will go into foreclosure.

  2. Reply
    May 3, 2011 at 3:58 am

    good luck…

  3. Reply
    May 3, 2011 at 4:57 am

    Because she missed only 2 payments she should talk to the lender to renegotiate the loan before it goes into foreclosure.

  4. Reply
    May 3, 2011 at 4:58 am

    If she is really broke and is losing other assets like a car or has other major debts piling up then as bad as this sounds I recommend letting the house go into foreclosure and filing bankruptcy. Typically I would lean towards short saleing the house but if she has no where to go then why not buy time by foreclosing if she is already f***ed. Also, if she can buy another month by negotiating with the mortgage co and then requesting a short sale she would have bought herself another month, plus if they reject the short sale offer the foreclosure will have only been stalled even longer and she would probably not have to be out until march. Good luck

  5. Reply
    Paulee V
    May 3, 2011 at 5:28 am

    Loan modification is on its way and its the best choice. Problem is nobody knows how its going to work. I would contact your lender and ask.

    Next short sale wont hit your credit as much as the foreclose and could take 6 mos to a year anyway!

    I would take on room mates or whatever to keep my house.

    good luck

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