Real Estate Law
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A deed in lieu of foreclosure is the best option because it allows you to avoid a deficiency judgment, which is when the lender sue you for the balance left on the loan after the proceeds of the foreclosure sale are applied. The only catch is that the lender has the right to agree to refuse to accept the deed. However, if the lender will accept, and you have no desire to keep the house, that's your best option.
A short sale is also better than foreclosure, but the lender does have the right to seek a deficiency judgment against you for any remaining balance (it has 2 years from the sale date to sue). Thus, if you tried to do a short sale, you would need to negotiate that the lender would agree to forgo seeking a deficiency judgment.
If all else, fails the lender will foreclose.
Yes. Under Ohio law, a lender has the right to seek a deficiency judgment against you if the proceeds from the foreclosure sale is not enough to satisfy the loan amount. The lender has 2 years from the date of the sale to sue.
Here's a good link that you should review that discusses this point plus other relevant issues regarding foreclosure: http://www.foreclosure.com/statelaw_OH.html