Risks of Foreclosure?

What are the risks of foreclosing? We have been hearing so many different things from different people.

We bought a house 12/2004 for $340,000 - now worth less than $200,000 and we still owe full $340,000 (we got screwed into "pick-a-payment" loans for a year).

We're thinking about just letting the house go - doesn't make sense to keep it because we are basically paying a huge rent and commuting (drive 60 miles one way to get to work). We want to foreclose and move closer to where we work.

Just wondering what will happen... Can lender garnish wages? Are we liable for capital gains if the bank sells for less than what the original mortgage is for?

So many people are foreclosing. Seems like the easy way out. We just want to make sure we don't get screwed in the future. Just had a baby girl, not sure how long we can make payments on home. Don't want to do something that will hugely jeopardize ourselves and put our daughter in danger of any sort.

[ForeclosureCaseLaw]

Answer to your questions:
1. Lender can garnish wages after obtaining a deficiency judgment.
2. Congress enacted The Mortgage Forgiveness Act in December 20th, 2007. In summary if it is your primary residence, and you fit all the other requirements, you will not be responsible for the difference.
Foreclosure is your last option. A foreclosure on your credit report severely reduces obtaining future credit. It is always better to be proactive with your lender than to let the "hand play out". First try a loan modification and if you are denied I would suggest a short sale. With a loan modification, the lender may reduce your mortgage payments and/or principal so that you can stay in your house. A short sale is your next best option.

[daviddoten]

You can learn how to do your own loan modification easily. Save thousands of dollars by getting educated.
www.loan-modification-kit.blogspot.com
Peace,
David