Wells Fargo approved another short sale yesterday for an Elk Grove seller. The negotiator was a chatty guy out of South Carolina who used to live in Sacramento -- on one of the "fish streets" in Rosemont. Very nice guy. I'd like to go on the record as saying that not every negotiator who works for a short sale bank is an evil troll.

In this situation, the seller had tried, unsuccessfully on two separate occasions -- one of which was in the middle of our active short contingent status -- to do a loan modification. He was current on his mortgage, borrowing money to make the payments. I can't blame the seller for trying to do a loan modification because all sellers are entitled to try to save their homes. But I know from my past experience that very few of them are granted. Many of my short sale clients are those who tried to do a loan modification and were denied.

People think that 3 ingredients are required to do a short sale, and these 3 do tend to create the perfect storm:

• The home is under water, meaning the sellers owe more than the home is worth
• The sellers have a bonafide hardship -- loss of job, divorce, illness
  
• The sellers are in default -- they have stopped making their mortgage payments

However, being in default is not necessarily a requirement. Whether a bank will issue short sale approval in a situation where the sellers are current on their mortgage depends entirely on the investors' demands.

I've worked with a handful of Sacramento sellers who were not in default and successfully closed their short sales. Believe it or not, a couple of them had loans with Bank of America. Other mortgages were held by Golden1 Credit Union and CitiMortgage. Given the choice, it's probably better for a short sale seller to continue to make the mortgage payments, but I let every seller make that decision and don't lean one way or the other.

It's the late pays that cause significant point drops on FICO scores. If the bank rejects the short sale because the seller is current -- and I've had that happen -- then we extend the short sale addendum, providing the seller elects to go into default, and simply wait out the required time period. Then we resubmit. Sure, under that turn of events, the short sale takes longer and the buyer could lose patience, but doing what is best for the sellers is an agent's job. If the buyer walks away, we'll just sell that home to another and start over.

If a Sacramento short sale agent tells a seller to stop making the payments, that agent could be in seriously hot water. Scalding water. Water above 212 Fahrenheit. For one thing, we can't give legal advice. Moreover, it might not be the best solution for the seller. We must, as short sale agents, put the needs of our sellers above our own. We have a fiduciary relationship to our clients. And some short sales work out for sellers who are not in default. It's worth the battle in my book.