Here is a serious Short Sale Question. What do you think??

Guy, this is a dicey one.  Who are we to tell them not to make their payment?  Who, then, should tell them?  Their lender?  Their lawyer?  Their accountant?  I've heard pro and con.  No certainty here.  Good luck.  They should be able to figure it out - lets see ... a nowhere shot and terrible credit, or save $30,000 and have marginalized credit. 

Just because you asked, it's my opinion that a Realtor should never advise someone to stop paying their mortgage payment.  The borrower has a legal obligation to pay, and failure to do so has legal consequences.  The borrower should speak with an attorney, not a licensed.  This kind of advise sounds to me like the unlicensed practice of law.

I just posted a blog asking the very same question including the background of why we are where we are.  Even the experts differ in their advice.  Homeowner who are not making their payment live for free for many months and can save up a nice little cash fund.

I don't give a definitive answer on something like this. I prefer to offer a couple of things for them to consider, on both sides of the issue. I think, as earlier responses have indicated, this is not just a real estate question. There are financial, tax, legal, as well as ethical considerations. So what did you decide to do?

Ellen Weintraub wrote a nice post on this subject.

I tell them to try alternatives first, such as a loan modification or renting a room or two out to scrounge up extra cash, and if those don't work, then talk to a cpa and/or tax attorney before taking this course of action. They need to research it for themselves because there is serious "collateral damage" done if they quit making payments.

I tell them they need to seek tax/CPA and/or legal advice. At the end of the day then need to get all the information necessary in order to make informed and intelligent decisions. A loan modification is a natural alternative. I have encountered many homeowners who simply want out.