Success Story: Lori Dolan

Figure carrying red debt sign

In 2003, Lori Dolan had a great job with Office Depot, working in creative services at the company's Delray Beach, Fla., headquarters.

She had just purchased her first home, a two-bedroom townhouse in a Boca Raton condominium community she'd been eyeing.

In other words, life was good.

Six years later, she needed a short sale to get rid of her dream home and avoid foreclosure.

"I wish I could've hung onto it, but I had to look at it this way, that in the long run, it could've been worse," Lori says.

Things started going wrong when Lori was laid off in November 2004.

"As of March, I had a job with another company. However, it was at about a $10,000 pay cut," the 37-year-old recalls. "So I panicked."

To lower monthly expenses, she refinanced, rolling in the balance of her car loan as well as her credit card debt.

Her $145,000 mortgage -- a five-year, adjustable-rate mortgage that she had hoped to refinance into a traditional mortgage -- became a $190,000 interest-only, three-year ARM.

"I didn't go crazy like some people that went, 'I'm going to refinance and take a vacation,' and buy something stupid," she says. "I had figured, the way the market was going, that it would just be a cushion until I could refinance again."

But in 2006, Lori decided to seek better-paying employment out of state and put up her home for sale. She set the price at $275,000, which was below prices of other units in the development.

"That's when what I call 'The Titanic Effect' started to happen," she notes. "I mean literally, it was overnight, the price of the market just went 'boom.' "

Then the company Lori was working for relocated to North Carolina, and she got another new job, making even less, at a public relations agency. She decided she might do better providing copywriting and PR services on her own.

But without a steady income, Lori had to ask her mortgage servicing company for help.

"I literally called the bank and said, 'Listen, I'm having problems making the payments, could I work this out?'" she recalls.

The lender refused, and in October 2007, Lori stopped making the payments and waited for foreclosure.

Meanwhile, she watched as similar homes in her community sold at rock-bottom prices. A short sale went for $103,000; another neighbor let his go for $98,000.

Lori continued to maintain her home and pay her other bills, including her association fee, which had risen from $180 to $317 a month because of hurricane insurance premiums.

Months went by with little word from her mortgage company, she says, and no date was set for foreclosure.

"I was pretty much telling the bank, 'Take it. I'm telling you right now, take it,' " Lori recalls. "But still, nothing was happening. It was weird, because I had heard of people being foreclosed on in as little as three months."

She was finally served with the paperwork in August 2008. But it wasn't until January 2009 that the mortgage company sent out a real estate agent to assess the property and take photos.

Since Lori's condo was in such great condition, the agent suggested trying a short sale. But the lender warned her it could take up to 90 days to get one approved.

A few months later, the association board president called to tell her about someone she knew, a first-time buyer, looking for a condo. Lori called the potential buyer and was up front that it was a short sale and that foreclosure was imminent.

The two struck a deal for $120,000, far above the last short sale in the community.

Lori hired an attorney skilled in short sales to file the paperwork. "My attorney even made a call to ensure the foreclosure proceedings would stop," she adds. "He told me they still didn't have a date set."

Just a month later, the short sale was approved. Closing was in April 2009.

Moving day was full of mixed feelings, Lori says, because even though she was relieved, part of her felt like a failure.

"It was my first house," she says. "I had saved money to get my first house and all my furniture."

Luckily, as everything was happening, Lori met the love of her life. They're now starting their life together, and her business is finally taking off.

Lori recommends the following tips for homeowners looking to complete a short sale: