Real Estate and Home Mortgages - Forclosure vs Short Sale

My son lives in the Rochester, NY area. He hasn't been able to pay his mortgage since December 2008. A few threatening letters from the bank and a bill collector have come leading up to the word "foreclosure" coming into the picture. He has been on unemployment for 5 months now. He has a few thousand dollars in the bank for an emergency, but won't touch it to pay bills. He owes over $11k on the mortgage and am sure he is delinquent on other debts. He's resigned to the fact that foreclosure is the way out. He has a place to stay if that happens. Recently he was approached by a man who buys houses all the time on a short sale. I know what a short sale is, but what are the ramifications to the seller (if any)?

a short sale just means that the bank will allow the home to be sold for less than what is owed and allow teh previous owner to walk away with nothing owed. The short sale would be a better scenario if the bank will agree to the terms. Even if it did go into foreclosure and he lost the home, im sure his credit is damged so much that it will take 3 years plus to be repaired. So, allowing it to be foreclosed isnt going to make him that much worse off IMO.

be warned; the bank MUST agree to the short sale. If the bank says no, then it is no. He needs to be very cautious about getting into odd deals without legal advice. He could put himself in a bad position if he does not understand what he is doing.

also, be aware that apparently in New York, the bank has a right to sue for the deficiency should the foreclosure sale not cover the entire mortgage debt. In other words, if the house goes into foreclosure and it sells for $XXXX.XX less than what your son owes, the bank can sue for that amount and receive a judgement.