Borrowers in trouble who also have negative equity need help just to get out and avoid a credit-wrecking foreclosure. Some are trying to do short sales, in which the lender eats the difference between the mortgage balance and what a buyer will pay, but that requires the lender's approval.
The worst option is just walking away from the house without negotiating something with the lender first, said Lisa R. Evans, deputy director of St. Ambrose Housing Aid Center in Baltimore, a large nonprofit counseling agency that helps people across the state.
"We certainly wouldn't encourage anyone to do that because of the credit implications," said Evans, whose group is seeing an increase in unemployed clients. "Credit affects the ability to rent, it can affect your car insurance, everything - and your [ability to get] employment."
