You should check into to Making Homes Affordable program to see if you qualify. But do not be blinded from seeing the larger picture. If you purchased the house 5 years ago, the home value has undoubtedly plummeted through the worst years of the recession/depression we are experiencing. Your income has taken taken a similar drop. Assuming you have a 30-year mortgage, the question to ask yourself is whether it is a good idea to struggle with the home given your current circumstances. Consider closely whether borrowing and dragging relatives into your financial pit is wise. Talk to a bankruptcy attorney to get a another perspective on your situation.
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Look up the State Bar at http://www.wsba.org - they have set up a project in conjunction with NW Justice to link homeowners with volunteer lawyers who can help you sort out your options and make decisions based on knowledge. This is not an income based program. They will help you and it will not cost you anything.
The lenders say one thing, and do another. It is very frustrating. A short sale or a deed in lieu are two of your options, but they certainly are not your only options. Did your lender tell you that mediation is now mandatory in WA? I doubt it. The point is to get someone with authority to the table to negotiate in good faith. It can work. But you need your own lawyer to negotiate effectively.
I hope this is a useful link for you - Elizabeth Powell
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