One of the main questions sellers who are contemplating a short sale always ask is whether they should stop making mortgage payments. There is no cut and dry answer to that question. Not to mention, it's also a legal question best answered by those in the capacity to render such advice -- which automatically bars real estate agents from answering it, unless those agents sport a J.D. after their names.

Every situation is different. Every short sale seller is different. Some sellers have a high tolerance for risk and others do not. See, the thing is if you stop making a mortgage payment, at some point, the lender is likely to foreclose.  But there are pros and cons to each side. And in some situations, but certainly not all, a file may not receive much attention if it's not in default.

I am closing a couple more short sales in Sacramento this week, both of which are in default. These were not calculated defaults by any stretch. In one instance, the husband, a sole breadwinner, lost his job. They have two loans on this short sale, and the second lender was threatening to send the file to collection. Generally, when a file goes to collection, it's sold to a third party.

On top of this, they had a minor emergency in the kitchen that resulted in a small flood. Fortunately, insurance covered most of the damage, but the sellers still had to pull funds out of thin air to pay a deductible. They also had to make a payment on the second loan to prevent that loan from leaving the lender's portfolio.

I had sold this short sale 2 or 3 times before we landed a buyer and a buyer's agent who would stick with the transaction. That sort of comes with short sale territory, though -- sometimes I have to do my job over and over. But I don't give up. I've been in the real estate business long enough to believe there is a buyer out there for every house. Just like there are buyer's agents in this business who really care if their buyers close escrow.

Although this seller had stopped making his mortgage payment due to circumstances beyond his control, I am hoping that his credit rating will pull itself back together in a couple of years. I'd like to see him buy a home for his family once again in the not-too-distant future. I think he would like that, too. I wish all my sellers could better protect their credit ratings by keeping their payments current, but for some of them, it's just not possible. In part, we've got Fannie Mae short sales to thank for that. Don't even get me started on Fannie Mae.

But remember, it's not so much the short sale that really dings your credit rating as it is the late payments. I've had clients who closed a short sale and turned around to buy another home 2 months later. Some agents tell their sellers to purposely go into default so the short sale will get approved faster and the agent will get paid sooner. That's not necessarily in the client's best interest. Before any seller stops making a mortgage payment, that seller should get legal advice.

Today, I will have a very happy short sale seller and a thrilled buyer's agent who gets to be a hero to the buyer. And that's what will make this Wednesday a great day!

Photo: Big Stock Photo