Short Sale / Pre-Foreclosure Sale / Deed in Lieu

[IOU]

I currently own a home with the following debt:
1st $351,000
HELOC $59,000

I stopped making payments in May so I am no technically two months behind (May and June). I placed my house for sale 5/1 with an asking price that would have covered my first. After 2 broke caravans, we were advised to reduce the price a little more to initiate interest. The new lowered price is $375,000. If we were to get this price, subtract the 7% (commissions and closing costs) the net to the 1st mort. co. would be $348,750 or <$2,250> owed.

I will be moving out of the house no later than the end of July (need to leave the area to find a new job). If this continues to drag out, I've been told that delinquent payments knock about 10 points off your credit score. This could go on forever. So, should I consider other options to settle up and move on?

Short Sale - Techinically (if I chose not to pay the $2,250 out of pocket), this is a short sale. Wells Fargo says it's not a short sale nor will they discuss it until an offer comes across. Should I lower the price more and does this have an impact on my credit more?

Pre-Foreclosure - I received a pamphlet in the mail from the US Dept. of Housing. In it, they give a mathmatical equation for this option. In it, the appraised value must be 70% of the loan (so, if my balance is $351,000 - the the floor would be $245,700) and the sale price must be 95% of the appraisal (in this case $233,415 using the number listed above). Does this hurt my credit worst than a short sale? Does the bank provide the appraiser?

Deed In Lieu - You choose not to fight and drag this through collections and everything and give the damn thing back. Does anyone have experience on how many points this will knowck off my credit score?

With regards to the HELOC, advice given on this site and others imply that once you decide what option to take on the first, you can go in with guns loaded and start wheeling and dealing. I am current and have three months worth of automatic withdrawls in the banks remaining and then will stop paying. I have 10% to pay (lump sum) and hope (again, based on advice given) I should be able to get some interest.

Thanks.

[All Cash]

Your credit is toast regardless as you are already going into 60 days past due with your mortgage. Trust me it's a lot more than 10 points off your credit score.

[endisnear]

Yes your lender will not even talk to short sale route with you until there's a signed offer on the table, and even then who knows how long they will take to approve/deny the offer.

With a short sale or foreclosure, you pretty much can count on your score dropping 200-300 points. So neither has a benefit over the other credit score wise.

As with a DIL, most lenders won't even consider it.

[momisery]

I hate to say this but we tried a short sale with Wells, and they lost the faxed paperwork from us 3 times, I even sent it UPS and they signed for it and still could not find it. They finally found it and then lost our realtors twice and our buyers walked. These people are horrible to work with. We have requested a deed in lieu and have not paid for 3 months almost now and they are still working on it??? That is all they will say, and they keep sending us a bill in the mail with late fees tacked on .. geesh. We are now looking into bankruptcy, hubby is working, but this month so far he has made 300.00 and his cell phone and car cost us more for his sales job then he can make. At times like these businesses take advantage of you. His unemployment ran out and he could not find a thing. He was in the car business at dealerships... we are living on my income and credit. But the credit is about to run out..

[StartingOver08]

I hate to say this but we tried a short sale with Wells, and they lost the faxed paperwork from us 3 times, I even sent it UPS and they signed for it and still could not find it. They finally found it and then lost our realtors twice and our buyers walked. These people are horrible to work with. We have requested a deed in lieu and have not paid for 3 months almost now and they are still working on it??? That is all they will say, and they keep sending us a bill in the mail with late fees tacked on .. geesh. We are now looking into bankruptcy, hubby is working, but this month so far he has made 300.00 and his cell phone and car cost us more for his sales job then he can make. At times like these businesses take advantage of you. His unemployment ran out and he could not find a thing. He was in the car business at dealerships... we are living on my income and credit. But the credit is about to run out..

This is typical for Wells Fargo. I have an attorney that I work with to negotiate short sale properties (I am a Realtor) and one of the packages Wells lost 11 times in a row! Yes, that's right - eleven times! I don't think they really lose the package, they do this to delay the negotiations. It still takes them 30 to 45 days to even assign a negotiator and another 30 days to 'look at' the package! It is still running 3 months to negotiate these short sales.

The main reason they specialize in delay is the servicer (Wells) gets extra funds when a loan is in default. This is where they make their money. If someone is paying on time the servicer simply makes a small fee - however, while in default the servicer loads up the account with fees - that's where the profit is - so there is a method to their madness.

DIL - not happening here - the lenders are refusing the deed! It is simply the lenders/servicers do not want the added cost to 'maintain' the property they own.

As far as hurting your credit, most recent evidence suggests that a foreclosure and a short sale have the same or similar impact on your credit score. Here is an interesting article on the subject: http://www.videocreditscore.com/fore...-credit-score/

[momisery]

Thanks for your response. WF messed our loan up from the start but there is no real protections for consumers it is all a farce really.

It appears the legal system will be just as bad, they are making money off of peoples bad fortune by filing paperwork for them. They first told me to not pay my unsecured loan so I would have the funds to pay the. Then they found out is was only 8 months old and now I need to pay it and somehow manage to eat while saving up money for them. I feel like letting it all go down and start over.. They are reviewing the DIL at WF, and have been for a couple months. You are right we were paying on time for the short sale. I believe it will be a foreclosure too which is why I am heading for the BK line now. Hubby still is not making any money and the unemployment is down to 2 or 3 weeks left. He went off of it due to increased commissions and now he is at 100.00 per week... he has not re-filed but I will be asking him to do that now... we need the money to pay for a BK. They are counting our rental checks even though they were short the 300 per month. So on the means test we are over the income in Missouri.. suck state is all I can say. No decent healthcare, wages are low, everything is expensive except housing and that does not make up for the lower wages.. it is horrible. I can't afford to see a dr.