In my role of helping people with short sales and as the developer of the Mortgage Relief Formula home study course, I talk to people who owe more than their house is worth and can't afford the mortgage payment.

A lot of the houses that people discuss with me are in the $200K range but many are upwards of one million dollars.

I have clients with $1 million or $1.5 million homes who are in the tough position of figuring out what they should do.

The other night we had a conference call with one of my colleagues who has done hundreds of nine day house sales which let you sell your house from start to finish in nine days even when there are seemingly "no buyers" around. We had a few people on the call who have homes of upwards of $1 million. Many have nothing except the house, which is a liability. But some folks have assets such as paid-for homes and equity in businesses.

The problems with those folks is that often they have a second mortgage and they have assets. As I have explained, folks with high end homes and some assets to protect have special issues.

If you have assets then the lenders may pursue judicial foreclosure even in states such as California that generally follow the deed-of-trust non-judicial foreclosure route. In judicial foreclosure, lenders can get a judgment that they can execute against your other assets. Although trustee sales are most common, more and more we will see lenders going to court against borrowers, even years later.

Second mortgages present a particular problem for the higher priced homeowner.

Many times the short sale proceeds will be insufficient to pay your first mortgage off, let alone the second.

The second mortgage lender may accept partial payment as a short sale but they may refuse to release you from the possibility that they will pursue your assets in the future. The statute of limitations for this sort of thing can be as long as four or five years, depending upon your state.

The best way to protect yourself is to do a short sale through a capable intermediary, or learn what you are doing before you start engaging your lender in a discussion. Then you can negotiate a release so the lender will not come after you later.

Avoiding foreclosure and negotiating a short sale for the more expensive home is more and more critical. It can affect your financial future for years to come.

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