In an article released today, Bank of America is easing their policy to accept no less than 10% on HELOCs and 2nd mortgages. The new policy is reducing the payoff amount to 5% for a short sale.
A majority (77%) of California foreclosures carry HELOCs and 2nd mortgages.
Short Sales on average, result in less of a loss for banks. Typically the losses are 30% less than losses realized from the foreclosure process
The short sale is a desirable alternative to foreclosure or deed in-lieu. The short sale will impact the credit score and limit real property re-purchase from 24 to 48 months assuming credit is properly maintained. However, the foreclosure will remain on the credit report for up to 10 years and will limit re-purchase up to 7 years.
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