I sold a house to a nice couple last March, since then their daughter had expensive surgery, they got divorced, he was making the house payments on his own but has fallen behind (around three payments) and wants to talk about doing a short sale. It's unfortunate how quickly things can unravel sometimes.
I think the $7,500 tax credit can help struggling new homeowners in these types of predicaments but in this case they bought the house before April 9th, 2008 when this tax credit went into effect. (It currently expires July 1, 2009).
A lot of banks are doing workouts right now as they don't want to add to their pile of foreclosures. As is the case when we are working with lenders and banks on short sales, be persistent and find the right person to talk to. We have found that you can talk to four or five different people at a bank and get different answers and different levels of helpfulness. Below is an article about Las Vegans seeking loan workouts. By all accounts it is a grueling process.
http://www.npr.org/templates/story/story.php?storyId=98017796
People in dire straits often get frustrated and don't make good decisions. The thing to remember is that eventually you will get a new job or find someone new, and then you will want your house back. If a home gets foreclosed, generally, the person who had the home foreclosed will have to wait three years before being eligible to get a mortgage again. The biggest case for trying to hang on to the home for now is some level of assurance from President Obama that this foreclosure crisis will be addressed in the next month or two:
http://money.cnn.com/2009/01/09/news/economy/stimulus_housing/ind
The rules are always changing now, and it's hard to keep on top of everything, but there will be some help on the way in 2009 and interest rates are going down, so try to hold on to the house!
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