What has happened in our country is like an epidemic, the symptoms of which have raced across all demographics and time zones, and through all the price ranges. The race to secure better housing, or home ownership where none existed before was on, and everyone who could get a loan was doing it.
Good hard working people who have never had a housing or credit problem have come to the realization that the short sale is the only realistic way to salvage their situation. By the time things have dereriorated to this point, the arrearages of their mortgage payments may be a couple of months to as much as a year or more. Through job loss, or cut in pay, death of a spouse, medical problems, or other hardships, they have lost the ability and the will to keep their house from foreclosure. Thus, the best way is to come to terms with their lender(s) and to negotiate a cooperative short sale before the Trustee's sale or foreclosure.
This is done by entering into a dialogue with the bank, best served by a real estate broker who has experience in dealing with banks, and getting the bank's guidance on terms they would accept if an offer on the home were made.
The bank will require a package be submitted by the borrower, including the hardship letter outlining the circumstances that have led to default on the mortgages. Feelings of guilt and the emotion of pride must be let go here, state the reality of the situation briefly. Accompany the hardship letter with your financial information on their forms, and with the broker's assistance, complete the checklist. It is absolutely important to submit a complete file the first time to avoid unnecessary delays.
Once received by the bank, this is where the waiting game begins. The process is greatly assisted by a persistent short sale negotiation expert making the follow-up calls to the bank to track the progress of the file and gain the bank's pre-approved price for listing the property. Some banks will just tell the borrower to just bring an offer, and yet that method can lead to greater waiting periods with more uncertainty.
Bank of America has recently adopted an open policy of making short sale processing more streamlined, by the introduction of their Equator system (formally known as REOTrans) as a vehicle to communicate with Short Sale Real Estate Agents and Homeowners attempting to complete a Short Sale with Bank of America. If it works, this will help to getting vast numbers of borrowers through the painful process of moving on with their lives.
So, if you are struggling to stay current with your mortgage, or have negative equity in your home, it may be the right decision for you to swallow your pride and talk to your attorney and CPA about your options. Only you can answer the question what's right for you, then get in touch with a qualified trusted real estate broker to assist you through the hoops.