There are several possibile options facing you right now, including:

• A loan modification –You may be in a position to qualify for a loan modification. However, for many people a loan modification is simply delaying the inevitable -- the values are underwater and they just need to get out from under their mortgage. Additionally, the big banks that helped create the current financial crisis have shown a very poor track record in completing loan modifications, even after government incentives. 
• Deed in-lieu of foreclosure – This may sound like an easy way out but it’s not. The bank takes the home off your hands but they don’t forgive the debt. It does nothing to solve any secondary home loans or tax liens that may exist. This simply makes it easier for the bank to take back the asset and you gain nothing.
• Deliberate foreclosure – Unfortunately we have encountered way too many stories of people who have just given up and let their home go. There are many reasons why a short-sale may be a better alternative but simply put, a short sale at least allows for a negotiated softer landing. Just letting a bank foreclose leaves you fully exposed to other loans you may have in addition to the black mark of a foreclosure on your record.

If the real estate you own is truly in financial distress; either you are behind and/or can’t afford the payments or you are hopelessly upside down or “under water”. The outcomes above are avenues of last resort rather than a strategic plan to recover your financial life. There are better options (click Next).