Final foreclosure hit

[shayl475]

I live in Michigan. My job of 22 years was transferred. I bought a new house where I was transferred and attmpted to sell the old one. Turns out we had lost more than 50% of it's value and had no equity. We attempted to short sale, found a buyer, bank approved, then the buyer backed out. My agent was not able to stop the sheriff auction of my home while waiting for bank approval on my short sale.

Michigan has the full credit bid rule and my lender entered a full credit bid at my auction. This means I am off the hook for any deficiency and also they cannot 1099c me (yes I consulted a real estate tax attorney on this). I am not insolvent and I took 32k cash out on a refinance so the tax implications can be big for me. I did put this much into the home for improvements and have pictures but not receipts as much of it was done over a decade ago. I now have four months left on my redemption period.

With six months of late payments and "foreclosure action started" on my credit report is there a huge difference as far as credit impact if I short sale my home (in Michigan you can do this still during redemption period) or just let the foreclosure be final? Since I already have a mortgage the amount of time until I can buy a home again is irrelevant. I am current on all of my credit lines, I make a 115k a year and my current mortgage principle on the new house is under 100k. I am thinking I am in pretty good shape to repair my credit and am receiving conflicting information on the final hit to my credit when the foreclosure is complete or the short sale is complete. Will there be a grave significance if it is foreclosure versus short sale at this point?

[DHubie4]

With regard to your credit, there are other aspects to consider such as your creditors canceling your credit cards when they update your credit standing, also consider trying to shop your car insurance and home owners insurance. I'm not totally sure, but I think in Michigan the insurance companies will check your credit and base your premiums accordingly. I also wonder what the tax consequences would be if you short sale rather than just let it go. Since it's no longer your primary residence, you may have tax liability.???