Foreclosure vs shortsale

[dconklin]

What is the name of your state? California

My husband and I own a home in California that we bought 2 1/2 years ago. Due to unemployment amongst other things, we can no longer afford this home. We moved out and moved up to Oregon 6 months ago. We have rented out our home in Calif for much less than our large mortgage is. With property taxes and the monthly loss on the house we need to let go of this and need to decide if foreclosure or shortsale is the best answer. The house has dropped to about $70k less than our loan. We have received so many conflicting stories on the best route to take. Our concerns are penalties, owing still the difference on the sale, owing taxes on the net loss. Our research has only turned up different answers. Can anyone give us some good advice?

Thanks so much,

DJ

[FlyingRon]

A short sale (if the lender will accept it) would be better than a foreclosure.

Selling it yourself, and making up the difference elsewhere, while unpleasant will be the best solution for your credit rating and really is what you are obligated to do.

It sucks to have to bring money to the closing table. I had to do that 20 years ago when I sold a property in NJ which went through a little market recession. At least since it is a rental property, you may be able to recover some of that loss on your taxes. It took my AGI to zero that year.