Foreclosure Advice Needed

Q: I currently own a home in PA- and renting in FL where I now work. I have been trying to sell my PA home now since January and have come down from 169 to 139 with no offers (I originally bought at 145). I currently have a first mortgage of 120000 and second mortgage/line of credit at 43000 for a total of 163000. I believe I am in a situation now where I will have to foreclose (I cannot afford it anymore) and would appreciate any advice in this area- in particular: 1. I have the opportunity to refinance everything at $168000 so it would just be 1 mortgage that I would then foreclose on. Is it better to foreclose with the 2 mortgages as I have it now- or just 1. In particular I am wondering what the chances are of a shortage/ deficiency judgment and the liklihood that they will "come after me" for that amount. Is it more likely with the scond mortgage- or even with the refinanced? I have to make this decision in the next couple of days so would really appreciate any advice in this area.

A: i) doing a re-fi seems silly since you would end up paying a bunch of closing fees and loan origination fees and not having any of this help you. ii) in the event that you do keep this property, interest rates are moving up right now, so it doesn't seem like a good time to re-fi, especially since you will likely get a high rate due to having a high risk credit

situation. iii) yes, they will come after you if they do not sell the home at a price that will cover the loan plus costs. iv) the lender has no incentive to get a good price for the house. They might end up selling it for far less than what you would sell it for, and you would end up having to make up $30K or $40 rather than just a few thousand if you sell it for yourself. v) if the market is soft, perhaps you are going to have to sit on this for a while. Perhaps you can rent it out? vi) even if you do get an offer at $139K right now, how would you close the deal? Unless you have the cash to pay off the mortgages, you cannot sell for less than what you owe.