*Due to rules of your state bar or mine, nothing herein is intended as legal advice, only intended as general information to better help yourself.*So sorry to hear of this dilemma. If my answer is not clear to you, please ask me for clarification by using the reply button.
What state is the property located in?
It may be better to allow the property to go into foreclosure. Here is why.In WA deficiency judgments can not be entered for nonjudicial foreclosure.Most foreclosures in WA are nonjudicial. If the foreclosure is nonjudicial, a deficiency judgment cannot be entered against you. The lender then would take the property in full satisfaction of the debt.Deficiency judgments can be entered on judicial foreclosures. However even in judicial foreclosures the lender will typically not pursue a deficiency judgment as it entitles the defaulting borrower a right to redeem his property if he can pay the necessary charges and cure his arrears.In summary, deficiency judgments are not usually entered in WA, but in some narrow instances they can be.
So, if we did a short sale that is considered judicial and the bank may enter a deficiency judgment? What is judicial and nonjudicial?
Would a deed in lieu of foreclosure just expedite things? Would it have the same credit issues as that of a foreclosure?
In either a deed in lieu of foreclosure or short sale, the lender would typically agree to waive any deficiency.
The deficiency judgment arises when a property is foreclosed in a judicial foreclosure. A judicial foreclosure is a foreclosure where the lender files a summons and complaint and proceeds through the court. A nonjudicial foreclosure is by trustee sale and publication
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Do you think we should hang on to the property or rent? We are trying to downsize and save some money and I feel like we are throwing away $2800/mth on a mortgage payment that's not going anywhere - especially when we are planning on selling within a few years anyway.
It is not possible for me to make that determination for you. You will need to determine the best modification available and then decide
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