An exit that protects you
Short sale and deed in lieu of foreclosure
When the debt exceeds the value of the home, these two options let you exit with less damage than a completed foreclosure. In a short sale the lender agrees to accept less than the full balance. In a deed in lieu you hand the property back voluntarily.
This tends to work when
- You owe more than the home is worth
- You have accepted that keeping the home is not realistic
- You want to limit credit damage and, where possible, get the shortfall waived
This tends not to work when
- There is equity, in which case a normal sale nets you money instead
- There are multiple liens that will not cooperate, which complicates both
How it actually goes
Get the deficiency question answered in writing
The single most important term is whether the lender waives its right to pursue you for the shortfall. This varies by state and by lender. In Montana a trustee's sale bars a deficiency outright. In Wyoming it does not.
Ask about relocation assistance
Many lenders and government programs pay relocation assistance on a completed short sale or deed in lieu. It is not automatic and it is not always offered unless you ask.
Straight answer
These are not good outcomes and we will not pretend they are. They are usually better outcomes than a completed foreclosure, particularly for your credit and for the deficiency question. If you are here, it is worth knowing they exist.