2010 Real Estate Guide
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real estate
Facing foreclosure? You have options

2. Short sale: A short sale is when you sell a home for less than what is owed on the mortgage. While not as damaging to your credit report as a foreclosure, your credit score will take a hit nonetheless.

Before approving a short sale, lenders take into consideration the amount of assets a borrower has and whether the borrower is already in default.

To sell the home as a short sale, you should list it with a real estate professional that's well versed in these types of sales. "The concept of short sales being a viable option has gained new traction," says Aaron Lewis, a broker-associate with The Lewis Team at Prudential California Realty in Modesto, Calif. Servicers are hiring to handle the volume and the Treasury Department, Fannie Mae and Freddie Mac are all attempting to streamline the short-sales approval process.

3. Deed in lieu of foreclosure: "Basically, you're handing over the keys to the lender in lieu of actually going through the foreclosure process," says Hayden. The lender then sells the property to recoup a part or all of the loan balance. "It may be less invasive than a foreclosure, but it's just as destructive to your credit. If there isn't a clear path in sight, some borrowers make this choice," says Hayden.

4. Call your lender: The bottom line: If you're struggling to make your monthly mortgage payment or you've missed a payment, make a call to your lender. "Stay on top of it," says Hayden. "Far too often those who are behind on credit card or mortgage payments are afraid of the phone, because they've been receiving calls from collection agencies and fear they'll have their house taken out from underneath them. Know your rights and be honest about your situation."

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