Help- Short Sale

[Anonymous]

Help!

What happens to my credit should I do a short sale of my home? I contacted my mortg. company to request a cancellation of my HAF second mortg ($4k). I got a letter saying I can ask to do a short sale since it is a request for less then the full amount of the payoff. What will this do to my credit? Is this a good or a bad thing?

[BBYGRL]

From what I understand, a short sale would have a negative affect on your credit score. I think it has the same affect as a foreclosure would.

[Anonymous]

Talk to the lender and point blank ask them (and get the answer in writing).  Most are going to report it as a foreclosure. If your 1st mtg is with the same company and it will be paid in full with the sale of the house, you may have some negotiation room.

Also keep in mind that the amount of the loan that is "forgiven" is considered taxable income.  There was a bill recently submitted to Congress to change this part of the tax laws, I'm not sure if it was part of the stimulus package that passed or not (you can google it to find out).