If you are like many American families who had a reduction in your pay, things can be stressful looking for a way to satisfy the mortgage, car payment, credit card debt and other things. 

Maybe you had to re-locate due to your job and are having to make double mortgage payments or a rent payment along with your mortgage. This can be a juggling act andmany find themselves going into default on their home loan and subject to Foreclosure.

 Their are other options to Foreclosure that many may not be know that exist. Their are re-payment plans, Loan Modifications and also the Short Sale. This may be an option if all others fail and is far better that having a Foreclosure on your credit report.

 You may ask why would the lender want to do a short sale instead of foreclosing on the property ?  The answer is that this could be a savings to the lender. It can take 9 Months for a Foreclosure and Real Sale of the home and by the lender allowing the resale it also is a benefit to the borrower as they do not have a foreclosure on the credit and the do not have there name posted in the local news paper. You must submit a short sale package in order to qualify for a short sale.

 When you realize it is time to sale your home in leu of a foreclosure, you don't want just any Realtor working for you as many have not ever worked a short sale. These are much different from the traditional real estate transaction. You should hire a Realtor who has experience and is successful working short sales.  The entire process involves much more than the average closing and will take longer than the normal 30 to 45 days to close. Once you have an accepted contract on your home, it must them go to your lender for their approval process as well.

 You may ask, how does this process actually work ? The listing agent and the home owner will negotiate the offers to get the BEST and HIGHEST possible offer. This is very important as the lender will also verify the value of your home to see if this will actually be a savings to the lender versus preceding with a foreclosure. Remember not to add in any fees that are not normally paid and the lender is not going to allow junk fees, home warranties, repairs to be paid at closing.

 Now lets say you have a 2nd Mortgage ( Junior Lien ) This can put a whole new spin on things as we are now negotiating with 2 loan service providers. The junior lean holder does not always want to be as willing to accept less on their loan and often ask for a promissory note to satisfy the debt. They must agree to the short sale as well. If they don't andyour home goes into foreclosure, they loose as well. So in this case something is better than nothing. Once the lenders are acceptable to the short sale, they will sendyou a demand letter that will tell the terms of their approval and this must be submitted to the title company or closing attorney depending on which one is used in your area.

 One thing to also keep in mind is that if your lender has already started the foreclosure process, this may continue until you have an acceptable offer on your home. You should always consult with your tax adviser and or attorney about possible tax consequences and legal questions you may have.

 Below are links to additional information that will be useful in understanding the process of a short sale

Short Sales - Requirements

Short Sales - Savings to the Lender

Short Sales - Possible Tax Consequences

Short Sales - Negotiating The Sale

Short Sales - Submitting The Offer

Short Sales - The Closing

Also, please be sure to read The Short Sale Savior, by Elizabeth Weintraub, available in bookstores everywhere and at Amazon.com.  This book has lots of great information and short sale experiences from Realtors who actually work them.