This is a Sponsored post written by me on behalf of Fannie Mae. All opinions are 100% mine.
Back in a past life, I worked for an attorney who routinely took care of foreclosure actions for a local bank. Preparing the documents and getting them served was part of my job, and it wasn't a job I particularly enjoyed. Some people were just so in debt and couldn't make the payments, whereas others fought with all they had to keep their home. Those people were in the minority though. Did they know their options? Back then, it was much harder to do your own research online or otherwise. Fannie Mae has a website, KnowYourOptions.com, that lists the options that you do have if you are facing foreclosure or so far under water on your mortgage that you don't have much hope for your situation.
In looking over the information available at KnowYourOptions.com, I found the information to be very easy to understand. Living in an area where the real estate bubble burst a few years ago, I have had friends facing the exact problems that are discussed on the site. A dear friend went though a short sale (selling for less than what is owed; typically needs bank(s) approval) about two years ago and could have really used a site like this to help them gather the information that was needed to make a final decision about what to do in their situation. They received bad advice from their Realtor, which only prolonged their situation. It helps to rely on experts, but also to do your own research. Pursuing a short sale is better for you credit-wise and you may be able to buy another home again sooner than if you had gone through a foreclosure action.
Sometimes, depending upon your situation, there are ways to help minimize the credit hit that you will face. A deed in lieu of foreclosure is one tactic. This is where you deed your home back to your bank in consideration for the mortgage loan. This strategy also is better for you credit-wise than a foreclosure and in some instances (if your mortgage is owned by Fannie Mae), you can sometimes stay in your home via a lease.
Don't be scammed. There are lots of unsavory people out there who are looking to take advantage of unsuspecting and desperate home owners. Visit the "Beware of Scams" tab at KnowYourOptions.com to make yourself aware of the hallmarks of a scam (such as being asked to pay fees for credit counseling or signing your property's deed over to them). If the offer is too good to be true, then it probably is!
If you are thinking about foreclosure or are facing foreclosure due to an inability to pay your mortgage, definitely check out Know Your Options by Fannie Mae to learn more about what your options are. My advice is first and foremost to take a long hard look whether or not you can truly afford your home. In my past experience, nearly everyone that I had to prepare foreclosure actions against could afford their home long-term. However, if you can't afford your home and realize this now, there are actions you can take to help minimize the credit damage you face, not to mention the emotional toll of losing your home.
Disclosure: I'm not an attorney. The advice I offer is not to be construed as legal advice. As always, be prudent and do your own research and rely on professionals to guide you through the process.