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I have decided to label 2008 the Year of Fear. There is so much uncertainty both in the economic marketplace, the real estate market and in the employment sector of our economy that a lot of people are responding in fear and are hesitant about what to do next.

One woman did not hesitate, but pulled the trigger on herself. Addie Polk of Akron, Ohio was apparently overwhelmed by the fact that she could not make her payments and was going to be foreclosed on and she shot herself as sheriffs were trying to serve her the foreclosure notice for the 30th time. For the full article, see Woman Who Shot Herself.

The good news for Addie is that she lived, first of all. But she also received so much press that Fannie Mae decided to forgive her mortgage. She now has a home free and clear according to the article on CNN referenced above.

The sad thing is that there are a lot of people like Addie out there who simply don’t know where to turn. Financial pressure can be overwhelming and if there is no apparent way out, people are often tempted to just walk away. There are a couple of things you can do.

Work Out Program

If you are unable to make payments, the first step is to contact your bank and let them know. The bank should be able to talk to you about your options with them. If your setback is temporary they may just defer a couple of payments until you can get on your feet. If your setback is permanent some banks are restructuring their loans. If your bank can’t/won’t help you then you need to move on to other options.

Short Sale / Short Refinance

Many people have heard about the short sale, where you sell your home and the bank agrees to take less than what is owed as a complete payoff. This option is better than foreclosure because it is less severe on your credit rating. The reason behind that is that someone who does a short sale is obviously doing what they can to meet their financial obligations instead of just walking away from their home. For more information on short sales, see Short Sale Information.

Akin to the short sale is the short refinance. Did you know that you could possibly refinance for less than what you owe on the home and still get to keep your own home? You need to speak to a loan officer who is able to work with the bank on this. For more information, see Short Refiinance.

Foreclosure

Your other option is to just stop making payments and allow your home to be foreclosed on.  Many people feel like this is their only option, although it should really only be a very last resort.  A foreclosure can severely affect your credit rating for years to come and should be avoided if possible.

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