Mortgage Forum

Joel Fraser

I live in Nevada. I owe $280k on first, owe $50k on heloc. I originally had an 80/20 loan in 2004, refinanced to the above loans in 2006. My house is worth anywhere from $150k-$200k. I am current on both loans and my wife and I both have 700 credit scores. We secured these loans with stated income application and if we provided W-2's or tax returns the banks would see that we can not afford the payments. However, if they see our bank accounts they would see enough money deposited each month to pay the bills. We only have about $2k in liquid assets and have about $20k each in 401ks. We would like to do a short sale and have a couple of concerns.1) If the house sells for $200k and the 1st lien holder agrees to short sale, does that prevent them from coming after us for the balance (80k) or filing a deficiency judgment against us?2) Will I be able to negotiate with the 2nd lien holder to reduce the total amount due, make payment arrangements or some other settlement? And prevent them from coming after me for any deficiency?3) How will this affect my credit if I can accomplish this without missing any mortgage payments? Or am I better off to just stop paying on both of these loans to force their hand.I should let you know that I can afford to continue making payments, but I have just made a business decision that I can not keep paying 2,500 a month on loans that I am upside down by $150k. Some people may not agree with this and say it is unethical to walk away but I am strongly considering this even if it hurts my credit I believe I will be better off in 5 years.