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Q:  What  happens if I let my house go into forclosure?
A:   A foreclosure will damage your credit, deficiency judgements against you may be filed by the lender,etc.  First and foremost, you should seek legal advice right away. The ramifications of a foreclosure are far greater than a short sale. Find an agent that is experienced and trained and has had previous success in short sales and get your home on the market as soon as possible.
Q: I'm over 3 months in default.  Can the bank kick me out or foreclose immediately?
A:  The bank has the right  to do so but they usually give you a chance to work something out - more likely through loan modification.  First, you must continue to pay your mortgage payment.  Second, immediately call your loan servicer and ask for the assets department responsible for analyzing your situation and determining the final outcome.  Once your status is determined, a loan modification will be submitted. 
Q: How does foreclosure affect my credit?

A: A Foreclosure and a Deed-in-Lieu solution affect your credit the same. Your credit rating could decrease by 250 to 300 points or more depending on overall condition of credit. This means if your FICO score before foreclosure was 680, it could drop as low as 300 and remain on your credit report. To rebuild credit after foreclosure,  you will not be able to get credit/loans at better rates of interest. If the financial markets are not good enough, one may not even be approved for any type of credit or mortgage and the foreclosure status stays on your credit report for 7 years.

Q:  What are the advantages of a short sale?

A: Short sales occur when a lender agrees to accept less than the amount owed against your property because there is not enough equity to sell and pay all costs of sale.
- There is less damage to your credit report after a short sale involving late pays than a foreclosure. 
- Another advantage of a short sale status on your credit is your ability to buy another home within 2 years or less instead of the 5 to 7-year or more required period as a result of a foreclosure (under Fannie Mae guidelines).
- If your credit report does not reflect late payments of 60-days or more, under Fannie Mae guidelines, you will be eligible to buy another home immediately.  
- The Mortgage Forgiveness Debt Relief Act and Debt Cancellation 
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March ,2010
Tax Tips: The Benefits of Refinancing
DESPITE THE BALKY CREDIT markets, many people refinanced their mortgages in 2009. And some of these cash-strapped refinancers borrowed even more money by taking out a home-equity loan -- although the credit crunch and the housing meltdown made those loans much harder to secure. Read more