Effective or not? A friend is working with a lawyer to write a contract telling the lender to reduce the loan principal amount or take a foreclosure - pick one.

Short Sales are effective. It takes about 3-5 weeks to get an answer when you submit a contract to the lender for approval.

Not a short sale -- a short pay.

Opps.

I have no idea. I have never heard of anyone I know offering to pay off their loan for a reduced amount with exception to someone who files Chapter 7 Bankruptcy and redeems the property for the value which could be lower than the loan balance.

I would guess it would not be very effective. Servicers typically would reject the idea based on the theory "if you do it for one why not all"

Let us know if you have someone try it and what the result is.