I've long held the position that THE SINGLE MOST IMPORTANT REASON a distressed Southern New Hampshire/Northern Massachusetts homeowner should consider opting for a short sale over a foreclosure is the little known "right to pursue a deficiency judgement" that many States, including New Hampshire, allow the lender.
Once a home is foreclosed on and subsequently sold by the lender, if the proceeeds are not enough to cover the amount the foreclosed upon borrower owed plus penalties and legal fees (which of course it won't be because I'm thinking if the house could have been sold for enough to pay off the loan, the distressed homeowner would have just done it and skipped the fun of a foreclosure...just a guess...), said lender has the right to pursue said borrower for the deficiency.
On the contrary, a properly handled short sale (sharp emphasis on the "properly handled" part) will include the bank's agreement (in writing) that they will not pursue the deficiency.
In the past the pursuit of a deficiency judgement after a foreclosure, although legal in many States including New Hampshire and Massachusetts, was rare. However, that appears to be changing. According to a recent article by Reuters, many thousands of Americans who thought they were walking away and closing a horrible chapter in their life when they allowed their bank to foreclose are now facing a new nightmare as debt collectors suddenly begin collection activity to pursue the deficiency. Activity which, apparently, can include wage garnishment, attaching bank accounts and seizing assets.
The article goes on to say that the Inspector General has urged the Federal Housing Finance Authority to direct Fannie Mae and Freddie Mac to more aggressively pursue deficiency judgements in an effort to recoup some of the staggering losses that more than $1 trillion in foreclosed loans has left them with. Fannie Mae, in particular, seems to have taken that direction seriously as that entity has gone after deficiency judgements in almost half the foreclosures it has been involved in over the last 2.5 years. Apparently Fannie Mae is not the only one becoming more aggressive, as officials in many geographic areas indicate that they have recently noticed a sharp uptick in the pursuit of deficiency judgements not only by Fannie Mae but also by Freddie Mac and other mortgage players.
So, if you are a distressed Southern New Hampshire or Northern Massachusetts homeowner, I strongly encourage you to consider a short sale instead of allowing a foreclosure. I freely admit there is nothing convenient about living through the short sale process. However, the inconvenience of the short sale pales in comparison to the inconvenience of having a deficiency judgement handed down on you, possibly years after your foreclosure.
Here's a link to the entire Reuters' Article - Americans Face Post-Foreclosure Hell As Wages Garnished, Assets Seized
If you have questions about Southern New Hampshire/Northern Massachusetts real estate, in general, or short sales, in particular, you can reach met at 603-490-5344.