[CW California]

Originally Posted by sandyh

I'm not an expert but can share what we were told and what happened with us.

We sold our home for about $45k less then the 1st & 2nd. With the second, we contacted them and asked if we could carry an unsecured loan with them so we could go forward with the sale. They then suggested that they do a short sale and write off the amount. They came and did an inspection of the house to make sure I guess we weren't selling it under FMV. They then accepted the short sale. We were very concerned with our credit at the time (that is why we originally requested to keep paying). We didn't realize it would take a hit until after we got the first credit report back. It showed both deliquent and charge off. We were upset as we were never late. It was some mix up with the transfer of ownership. National City corrected the deliquent reporting and it shot our credit back up (originally we had about 150 hit, and then it went up about 50 when the delinquency was removed). So for us, we are glad we weren't delinquent.

We also considered paying them back the $45k in which case National City said they would then take away the charge off report. After much consideration, we decided it was better to live with the hit on our credit and not pay the $45k. National City released us of our liability. You do get sent some tax form to say you got that relief of debt - not sure how it played into our taxes. I think we had to consider it some type of income - I can't remember. That made us pretty upset as well as we didn't know that. In hindsight, it is hard to know what is best. If you have a lot of debt (we do), when you score goes down, then all of your rates are affected. Suddenly you are having to pay more per month, pay more interest, etc. For $45k, probably worth it. For 10k? It is hard to know. Depends how much other debt you have and how much it will be affected.

Good luck.

So it sounds like you only need to get permission from the 2nd if the 1st is going to be paid in full?