Yes. The lender can foreclose and sell the property in question, or allow you to sell it for less than what you owe. The Lender can then obtain a deficiency judgement and attach the difference to any of your assets (including cash in a bank, other properties, etc). This will likely take 6-12 months. The bank will be less sympathetic for second homes and investment properties, than they will be for primary (homestead) homes. Also, if one can demonstrate true hardship, there is a better chance a bank will not take such hard measures (ofcourse...if one demonstrates hardship, it is unlikely one would have additional assets besides a primary home...). You should definitely contact an attorney EXPERIENCED in Short-Sale proceedings as well as either a Tax Attorney or a CPA to obtain professional advise regarding protecting your assets, and to understand the details of any tax implications of a short-sale in your specific situation.

Last updated on August 27, 2008 by Alex Avedano