short sale vs foreclosure in florida

[Joel Fraser]

My wife and I have our primary residence (purchased in june 2004) and a condo (purchased in june 2006). The plan was to sell the house and move into the condo while we put together plans to build a house. (I'm a builder). The market turned and here we are 2 years later. I am also an investor and have/had several investment properties separate from my wife. We let the investment properties go first (11 of them currently working through the foreclosure process). I alone signed the notes for those 11 properties. We also tried to hang on as long as we could and save the properties where my wife signed the note (our house and the condo). We wanted to save her credit if at all possible. We finally stopped paying on the house and condo in Apr/May to conserve cash. We put everything up for short sale and started working the process. We received offers on everything and started submitting them to the banks. The one piece of information that killed every one of the deals was that we wouldn't provide tax returns. After meeting with many re attorneys and bk attorneys the consensus was that it would be in our best interest not to provide returns. Last week the 2nd mtg holder on our primary residence (suntrust) agreed to a short sale without the tax returns. We have to come up with some money to make it happen, but we can handle that. There is enough money in the deal to fully satisfy the 1st mtg (greenpoint). Our goal: My credit is totally screwed and I may eventually do an individual bk, but we would like to somewhat salvage my wife's credit if at all possible. Our questions are this:1) In the interest of saving my wifes credit, is it really worthwhile to make the short sale happen vs foreclosure? 1) If we short sell our primary residence, does the housing bill from Dec 07 protect us from a def judgment and a 1099 or only the 1099? 2) If we short sell our primary residence and make the condo our primary residence might we be able to take advantage of the FHA program passed in July 08 and negotiate the 2 mortgage holders on the condo (chase and citi)? Since I now make $0 we pass the 31% test with my wifes income. I understand the program is voluntary on the banks part, but would we even qualify if we just moved into the condo? 3) How long do we have to live in the condo for it to be considered our "primary residence"? 4) Is there another plan or route we should be investigating? I have all kinds of other questions, but I thought I should start out with only a few. Any help would be greatly appreciated.