With all this house foreclosure one wonders how you can sell your house if you owe more.?

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I'm sitting here wondering with all of these people losing their houses, can someone attempt to sale their house if they owe more that what they can get for it. How does that work? How do they work with the negative equity? Do they get some kind of unsecured loan or something? Or do they just end up losing their house in the end becuase they can 't sale for what they want?

With all this house foreclosure one wonders how you can sell your house if you owe more.?

It can be done. There are usually some negative consequences. The process is called a "short sale" or a "short pay sale". The lender agrees to compromise the note rather than sell the property in foreclosure or take it back. This is done in the context of a real offer to purchase by a legitimate buyer and hardship petition by the seller to the lender. I handled one last year and the bank agreed to a discount of over $200,000 on their note. This was a case of extreme hardship due to medical problems and a house that was something of a "white elephant". The debt forgiveness is usually a taxable event. The seller gets a 1099 form from the bank for the amount of the discount, just as if the money were paid. But the tax consequences are minor and deferred compared to the credit devastation caused by a foreclosure. Contact a reputable local Realtor to see is s/he will take it on as a short sale. Be honest about your situation. Also see my blog article on the subject

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With all this house foreclosure one wonders how you can sell your house if you owe more.?

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