This question was asked on Trulia real estate search here and answered to my best ability below.

700 credit score but thinking of foreclosure and wondering how long will it take for my credit to recover?

Q: My 1/1,5 condo in NMB Fl was purchased for $137K in 2006 BUT the complex now has units selling for $17K-$24K. We also have about 25% units in foreclsoure and almost 65% of the owners are not paying HOA fees. I am thinking of sending the keys to the bank because the builiding will probably be shut down by the city because the HOA cant pay its monthly bills and it was already sitting on $180K in unpaid HOA fees at the start of 2009 . I hate to see my credit go in the toilet but I cant wrap my brain around holding onto a property that has decreased 85% in value in the last year. I am a responsible person and paying all other bills on time. I was never late with my mortgage payment in the 3 years since I purchased. The bank wont consider lowering the principle which in my opinion would be the TRUE way to help in part save the economy. But that is just my 2 cents which is now valued at -$5 due to depreciation. Thanks for any advice!

A: Whew, that’s a tough call. Where’s the Suze Orman of real estate when a good question like this one pops up!? It seems as though the association/condo board have failed at going after delinquent fees needed to maintain the building. Delinquent payments are very common in all condo buildings yet at this high level of 65%, it a surprise the water is still on. The new Fannie Mae guidelines from January 2009 would not allow financing so it would have to be geared to cash investors yet no investor would take on the liability of covering everyone elses slack with inevitable assessments on the horizon.

A Deed in Lieu of foreclosure may be the most viable option although speak to your bank(s) in all honesty on the current circumstances and be sure to negotiate DOWN the deficiency lien. Do not take no for an answer and keep climbing the peon ladder until the manager can help. I say this only because I’m afraid a short sale just won’t fly from lack of a ready willing & able buyer. IF you could find a buyer, then please jump on the short sale option making sure there are no deficiency liens or 1099′s if it’s an investment property. I assume this is your “home.” I also heard an interesting concept yesterday where it MAY be that FICO (credit) scores will be weighted in favor of owners such as yourself who are forced into foreclosure or hand over their properties between the years of let’s say 2005-2009. Meaning less likely to greatly “break” the FICO instead weighted and factored in favor on the years of trouble down the road when you feel it’s time to borrow again. Just an idea that may make sense in the future because of the current circumstances (not a fact but likely).

It’s been a tough battle over the last 4 years for a large majority of owners in similar circumstances as property values tumbled. This building WILL eventually turn around after a financial correction and an efficient condo board is established. Miami Dade residential sales are up 67% over this time last year and 20% over March! Stay positive & strong no matter how bad it gets and remember this simple (& odd) advice from my father when I’ve have hard problems to swallow… “they can’t kill you!”

I am open to more ideas & opinions and my answers can be wrong as a fallible sales associate.. This is only opinions and advice from today’s knowledge/understanding and I welcome any further insights I may be unaware of.

The short sale should be discussed with your bank to explore options. Let them explain your options and they may even be able to restructure your monthly payments! They should be willing to work with you to avoid the foreclosure and I’m here to help also at MiamiDreamRealty.com

1.  Call YOUR LENDER!! 80% of those now in default and loosing their homes DID NOT call their lender! Many feel their position is hopeless. Don’t despair and try calling your lender first to look into your options. Call your loan originator or Mortgage Broker who got you the loan. Call your Realtor also. See what they recommend. You might get a local manager to give you someone at the “Top” or near the Top to help you with your loan issues.

2. Go to www.HOPENOW.com which is the government backed advisory program and see if your lender is on the list. Reference, remind them, they are a part of this program and see what options you may have.

3.  Remember, the squeaky wheel gets the grease!! Be a royal pain in the butt and don’t give up!! If you really WANT your home there might be a way for you to stay. New bills are being introduced in Congress and some existing ones are on their way through the halls of congress which could give you relief. If you want to stay then try some stalling tactics. Get a reduced payment plan, lower interest rate, lower “reset” rate, etc.

4. This is the last route before you admit maybe it’s time to move on! But before you do this you’ll need to contact an attorney (bankruptcy or real estate) and CPA for tax ramifications.

If your going through anything related to a short sale then please comment for those readers looking for additional advice and information.