Sometimes no matter what you do there is no way to get a loan modification application approved. It could be that your income is too low, your expenses other than the mortgage are too high, or even with a reduced interest rate mortgage your debt-to-income ratio does not work. Also, bankruptcy may not be the best option for you as you may not have a viable plan to deal with the arrearage and yet you have no debts other than the mortgage. In this case, a short sale may be the best option for you.
In a short sale, the bank agrees to allow you to sell the property at an amount less than what you owe on the mortgage. This may be with or without a deficiency. A short sale with a deficiency is known as a short sale with a release of lien only. In this case, the borrower/seller will be responsible for paying the lender the difference between the amount owed on the mortgage (including late fees, foreclosure costs, etc.) and the amount it receives in proceeds from the short sale. A short sale approval without a deficiency means that you will not owe the lender the balance that was written off as part of the short sale. However, you may have tax liability for the amount forgiven.
At the Law Offices of James T. Maye, we are able to assist you in determining whether a short sale is an option you should consider. Call today at 203-939-1380 to schedule your free consultation.